Application declined even if pre-approval was accepted!

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Otto Dargan
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Re: Application declined even if pre-approval was accepted!

Post by Otto Dargan »

Hi FutureSight,

Getting a reliable pre-approval can be difficult seeing how often people get pre-approved initially only to get declined when they actually apply for a home loan.

If you had an on-the-spot approval or a system generated approval then it's likely to have never made through to the lender's credit assessment department so didn't meet their policy. Another reason can be that the LMI provider declined your loan or if your security property is unacceptable to the lender, e.g. some banks may not accept inner city units or other unusual property types. If your situation has changed, for example you changed jobs then that could also be a reason.

Please note that assessing a loan application costs the banks a significant amount of money, as the credit staff they use to assess loans are usually highly trained and well paid and the behind the scenes work can include credit checks, employment verification, fraud checks, credit scoring, data verification and finally a decision.

Australian banks are always trying to reduce these associated costs associated. In 2008, several lenders stopped doing a full assessment of pre-approvals, as many pre-approvals didn’t convert into a settled loan. In doing so, they increased their bottom line, but left many people at risk of losing their deposit by committing to buy a property at auction, that they can’t finance.

You can learn more on our website or speak with one of our mortgage brokers as to what you can do now and what other options you may have. You can call us on 1300 889 743 to discuss or simply complete our free online assessment form.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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