Aussies warned to check their credit score to avoid home loan refinance issues in 2024
Announcement posted by Invigorate PR 19 Dec 2023
Applying for a home loan can be a bit of a painstaking task and many errors can be made. Lenders will scrutinise your home loan application thoroughly before they decide to approve or reject it, so it's important that you avoid any inconsistencies or missing information.
According to Julian Finch, leading finance broker and founder of highly respected brokerage firm Finch Financial, which specialises in personal and home loans and business finance, 50 percent of all home loans are rejected in Australia. Finch Financial enjoys a loan approval rate of 99 percent for its clients, one of the highest in the industry.
"Over the years I have had clients come to me saying that they have had their home loan application rejected and they have all but lost hope. I have been able to turn many of these situations around. With a financial advisor by your side to guide you through the application process, you will drastically minimise the likelihood of a lender rejecting your application," Finch said.
"In my years of experience, I've come across countless mistakes that people make when applying for a home loan. So if you're currently in the market to buy a house, let's take a closer look and see if you can avoid making these top five mistakes," Finch said.
Applying for a loan through a lender that is not suited to your circumstances
"Different lenders have different lending requirements so if you apply for a loan with a bank that does not suit your circumstances, you won't get your application approved. Different lenders are willing to take different levels of risk, so if they think you might not be a good fit as a borrower, you'll be rejected," Finch said.
"Lending requirements vary greatly across different financial institutions. Working with a finance broker will avoid this difficulty because as experts in the industry, we have plenty of knowledge about which lenders will be the right fit for you, so you're more likely to get your loan approved, and quickly."
Your expenses are under-cooked
"As part of the assessment criteria for lending, your lender will ask you to provide details regarding your living expenses as part of your home loan application. To do this accurately, you should have your budget in place so you know exactly how much your expenses per month add up to," Finch said.
"Banks are experienced lenders and process thousands of applications per month. If you're not being truthful about your expenses, they'll pick up on it right away."
Your expenses are overstated
"Another mistake people make is that they overstate their expenses. This can happen very easily," Finch said.
"This is why it is essential that you get a budget in order and ensure you are diligent with your expenses. By doing this you also develop a valid track record of your ability to make loan repayments, regardless of whether the interest rate declines or increases up to a certain point."
Issues with your credit score
"Some of the most common credit score issues include lack of credit history and having been denied an application in the past. If you have a low credit score, many lenders will decline your loan application," Finch said.
"Many things can affect your credit score. Payday loans, missing payment due-by dates on phone and energy bills and credit cards can also cause havoc with your credit score. You would be surprised how many people don't know what their credit score is.
"Every time you speak to a different lender and submit your details to them, they may make an enquiry on your credit score. This further reduces your score. This is one of the big reasons why it is beneficial to work with a finance broker. They will only make one enquiry on your credit score and then use this information when dealing with lenders. My strong advice is to find out what your credit score is and try and improve it. A finance broker can certainly help you with this."
Failure to disclose all relevant information
"Not disclosing all the necessary information is a bad sign. Lenders have access to a lot of your financial information and it is likely they will find out if you have been untruthful about your expenses, debts and accounts," Finch said.
"It's best to be truthful about your financial circumstances. If you don't, then you could get rejected and this will severely impact your credit score making it difficult for you to get finance in the future.
"While there are lenders that do assist people with impaired credit scores, the interest rates are higher and the process is more complicated."
Mortgage brokers help you get approved
"Mortgage brokers have the knowledge, skills, industry contacts and expertise to get your loan application approved. Having been in the industry for years, we have built up good relationships with our lenders and we know which ones are suited to your application. Besides all this, we might even be able to wrangle you a better rate from the lender, so definitely consider engaging your broker to avoid making mistakes on your home loan and to maximise your chances of success," Finch said.
About Finch Financial Services
Based in Hurstville, NSW, Finch Financial Services has been servicing Australian families and businesses with home, personal and commercial loans as well as asset finance services since 2015. Ranked amongst the top five percent of brokerages in Australia according to data from the MFAA, Finch Financial Services is a leading brokerage and family owned business that specialises in finding its customers loans that are tailored to their needs and goals.