There are five factors lenders look for that could be used to reject your application.
There are five factors lenders look for that could be used to reject your application.

Five reasons you might not get a loan

PROSPECTIVE buyers across Australia need to be aware of the five 'red flags' that lenders look for if they wish to successfully obtain a home loan.

New research from home loan comparison site HashChing has revealed that house hunters with bizarre spending habits, questionable credit history, unstable employment, a criminal record or who hide expenses are less likely to receive approval for a home loan.

Applicants need to be wary of any credit cards they have, as well as their spending habits.
Applicants need to be wary of any credit cards they have, as well as their spending habits.

Lenders tend to look at what kind of lifestyle the applicant leads, their spending habits and if they have any debt, with all lines of credit - such as credit cards and store cards - factored into an applicant's monthly expenses.

HashChing broker Collins Mayaki said the first step to a successful home loan application is knowing what lenders look for.

"Although every applicant's situation is unique, I've seen five things that always raise red flags for lenders," he said.

"Despite a drop in house prices, wages have stagnated and living costs continue to climb, forcing many Australians out of the mortgage market entirely.

"Meanwhile those who are looking to apply for a home loan face an unprecedentedly harsh lending environment."

The royal commission into banking has made it harder for buyers to obtain finance, with banks cracking down on any applications deemed risky.

One of the key points raised by the research is that even if you have a credit card that is fully paid off, the bank can still regard it as a debt that goes against your application.

Applicants will also need to have held the same job for more than six months, or to have moved into a similar area after previously holding a job for two years.

They will need disclose all expenses as well, as lenders can gain access to bank statements and can uncover expenses that aren't accounted for, giving them a reason to reject on the basis of nondisclosure.



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