Your Home Loan Has Been Declined - Why???
Many have experienced that sinking feeling when this type of message hits their Inbox. Loan declines are a topic most lenders do not enjoy discussing at any level, so we will try to shed some light on this elusive subject
The main reason? Your credit file is not as clean as you may have believed!
The last few years has seen more and more public awareness around individual credit files and how they impact any type of loan application. There are no discriminating reasons, it’s simply all about how good you have been when it comes to paying your bills over time!
Here is a common example.
You once shared an apartment with one or more university co-students during your final years of study. The lease was originally in your name, as were the utility bills etc. You paid all the bills, your flat-mate gave you their share in cash. You then land a great job and relocate interstate. You change the lease to your flat-mate’s name as well as the utility bills and provide them with sufficient cash to pay the final bill (in your name) then never give this any further thought ………
Finally, 3 years later, you have saved a great deposit to buy your first property and have met someone you want to buy a home with. You apply for a home loan and you get the email advising you both that your Home loan has been declined’. Why?????
After much investigation, you discover that your old flat-mate didn’t end up paying that last bill in your name - in fact, they didn’t pay any bills after you left! They left it all to someone else, who simply didn’t pay anything as they were evicted 3 months later after not even paying the rent! You now have to deal with a $467 default from the electricity provider and a court order for $1250 worth of damages sustained to the rental property you used to live in, simply because the guilty parties couldn’t be found and your name was on the original lease. Your bank simply doesn’t want to discuss it with you (and doesn’t legally have to), as you have wasted their time and resources by making an application for a home loan when, on paper, you don’t pay your bills!
Even if you were to now pay these outstanding amounts, they can remain on your credit file for a full five years from when they were originally listed!
Credit worthiness is a big deal - that small utility bill you forgot or didn’t pay a few years back will come back and haunt you one day when you least expect it. If the bill is in your name, you alone are responsible for it, not your ex-partner, or former flat-mate, or rental agent etc.
Credit default listings are serious and they don’t discriminate, you need to pay your bills, and pay them on time! Like I often say, if you think nobody will notice, try missing a couple of payments!
If something like this has happened to you or if you would like further information around credit files and how to get a copy of yours, please call me on 0438 041 111 and I will be happy to discuss or speak to your financial advisor and seek their advice.
As always, enjoy life, work hard, play safe and remember that we are always here to help you
‘Take the Confusion Out of Lending’