| Details | Description |
|---|---|
Customers | Ella and Frank |
Customer Goal | To buy vacant land and later build an investment property |
Problem | Rejected by a lender due to low credit score, recent missed payments and restrictive land contract terms |
Loan Amount | $500,000 |
LVR and Term | 80%, 30-year term with an initial interest-only period |
Interest Rate | 5.55% investment loan |
Income | The combined assessable income consisted of a base income of $84,500, additional income of $40,000, and an expected rent of $25,000. |
Solution | The expert mortgage broker restructured the loan, explained the credit history, and managed contract risks to secure an approval for a vacant land loan. |
Home Loan Application Rejected, What Now?
When Ella and Frank came to us, they were already discouraged.
They had followed the usual advice: work hard, save money, and plan ahead. Their goal was to buy vacant land and build an investment property as their second property, a long-term plan to strengthen their financial future.
They had already applied directly with a lender.
The application was declined.
After being rejected for a home loan, they were left confused.
They knew they could afford the loan, but didn’t understand why the answer was no.
That’s when they decided to speak with Prabesh Thapa, a mortgage broker with experience in handling complex and declined loan cases.
Why Was The Home Loan Application For Vacant Land Rejected?
The rejection didn’t happen for just one reason. It was the result of several issues combined, the kind that automated lending systems struggle to assess correctly.
Credit History Concerns
One of the main issues was credit history.
Ella’s credit score was 545, and Frank’s score was significantly lower.
Their credit file also showed two recent missed repayments. These missed payments were caused by a misunderstanding, not financial stress. However, credit reports don’t explain the context. They simply record events.
To the bank’s automated system, this appeared to be an increased risk.
Vacant Land Contract Restrictions Including Buy-Back Clauses
The second major issue was the vacant land contract.
The contract included a clause allowing the developer to buy the land back if construction wasn’t started or completed within strict timeframes. There was also a restriction on resale, limiting how the land could be sold.
For lenders, this reduces security.
If something went wrong, the land would be harder to sell and harder to recover against. This is a common reason vacant land loans are declined.
Non-Standard Loan Structure
The application was structured with only one applicant, while the spouse was treated as a non-applicant. This is not a standard setup and often leads to additional scrutiny around income, expenses, and credit.
Timing Pressure
To make matters harder, the application occurred during the holiday period, while the building contract was still being finalised. Delays increased uncertainty, and many lenders are reluctant to assess complex cases under time pressure.
Importantly, affordability was not the problem.
Ella and Frank could afford the loan, but the situation had not been structured or explained in a way that the lender could support.
How An Expert Mortgage Broker Secured Approval After a Loan Decline
From the outset, Home Loan Experts mortgage broker Prabesh Thapa recognised this was not a standard case.
This was a second property purchase, involving vacant land, future construction, a prior lender rejection, and credit concerns, which required experience, judgement, and proactive lender communication.
Clearly Proving Income and Affordability
The first step was to properly assess and present income.
Ella worked full-time and earned: 38 hours per week × $42.77 per hour × 52 weeks
This equated to a base income of approximately $84,500 per year.
In addition, she earned extra income outside her base pay. This type of income is often ignored if not presented correctly. Prabesh assessed it in line with lending policy and included over $40,000 per year in allowable additional income.
For the investment property, he also included expected rental income of $25,000 per year, after allowing for realistic property expenses.
The result was a positive monthly surplus, clearly demonstrating the loan was affordable.
Addressing Credit Issues Before Submission
Rather than risking another rejection, Prabesh addressed the credit concerns before submitting the application.
He provided a clear explanation showing:
- The missed repayments were a genuine mistake.
- The client had savings at the time.
- Recent financial behaviour showed strong discipline and improvement.
By explaining the story behind the credit report and supporting it with evidence, uncertainty was removed for the lender.
Sharing Financial Responsibility
Although Frank was not on the loan, Prabesh provided supporting evidence showing that he was working full-time and actively contributing to household expenses and existing liabilities. Recent payslips were included to confirm this, so the lender could clearly see that Ella was not carrying the financial responsibility alone.
By explaining how income and expenses were shared, Prabesh removed uncertainty and ensured the application was assessed based on reality, not assumptions.
Managing the Vacant Land Contract Risk
The most complex part of the case was the vacant land contract.
Prabesh reviewed the contract early and confirmed policy acceptance before lodging the loan.
When delays with the building contract created timing pressure, he adjusted the strategy and negotiated approval for a land-only settlement, allowing construction to proceed later.
This strategic change was critical in keeping the deal alive.
Approved to Buy Vacant Land for an Investment Property
This time, the outcome was different.
Despite being initially rejected by a lender, dealing with credit issues, and navigating strict vacant land contract conditions, Ella and Frank received unconditional approval to purchase the land.
They secured the property, regained confidence in their plans, and now intend to proceed with construction once their final designs are ready.
This wasn’t luck. It was the result of experience, proper assessment, and strategic advice from their mortgage broker, Prabesh Thapa.
Dealing With A Bank Rejection? We Can Help
If a bank has declined your application, told you your situation is “too complicated,” or you’re trying to buy a second property or vacant land, you’re not out of options.
At Home Loan Experts, we specialise in the cases that banks and many mortgage brokers walk away from. We don’t rely on automated systems or surface-level checks. Instead, our brokers take the time to understand your full financial position, identify what went wrong, and structure your loan correctly from the start.
Speak with us today. Call us on 1300 889 743 or submit an enquiry online.