What to do when the banks turn you down
- Posted in Getting Started
Having a home loan application turned down happens to thousands of people every year. But if it happens to you, don’t be discouraged.
In fact, did you know 3.6 million of Australians have been declined a loan by a financial institution? At Pepper, we recognise that everyone's circumstances are different and do not believe in a one-size fits all approach to your loan applications. Here we explain how it works and what to do when the banks turn you down.
Major banks’ home loan processes
A rejected loan by a traditional lender may be a reflection of the lender’s current credit policy, which loosens or tightens based on present market conditions and their risk management processes.
This means as a borrower you may have had no issues obtaining a loan from a bank in more robust economic times, but you might be rejected today because it's a tougher economic climate.
At such times it's worth talking to us at Pepper Money because we may well have products that can suit your needs that the major banks don't offer.
The other major reason for an application to be turned down can be your credit history. Major banks and other traditional lenders use an automated credit scoring process, which means your application might be declined simply because a computer gives your application a score based on your past credit history.
Non-bank home loan processes
While it can be disheartening to be rejected by a bank for your credit history there is light at the end of the tunnel. Because non-bank lenders, like Pepper Money, can offer you a different approach to your home loan applications.
Perhaps you don't have up to date tax returns, because you are self-employed or you have filed for bankruptcy in the past? These circumstances may not fit a traditional lender’s loan suitability and credit assessment criteria but with some non-bank lenders, such as Pepper Money, your application is assessed individually by an underwriter against our loan suitability and credit assessment criteria. So each application is assessed on its individual merits, by a person rather than being appraised against an overarching credit score by a computer.
When it comes to home loan applications, if you have defaults or judgements against your name, we can still consider your application and you may still be eligible for a Pepper Money home loan that suits your needs, provided we are satisfied that your application complies with our normal credit assessment and loan suitability criteria. We are more concerned with assessing why the defaults and judgements occurred, your current means of income, your ongoing ability to repay the loan without incurring financial hardship, where the property is located and the size of your deposit. We assess a range of factors so that we can determine your requirements and objectives for the finance. Approval will be determined based on our lending policy.
Many borrowers make the mistake of taking a back seat once they’ve been declined and wait years until they pluck up the courage to apply again. But you don't need to wait for a bank to lend to you. At Pepper Money, we believe everyone has the right to achieve their financial goals and we make it our mission to offer other avenues that traditional lenders may not offer. So speak to us today on 13 73 77 or enquire online about how we may be able to help when the major banks say ‘no’ to your loan application.