Here is the reasons:
–You keep inactive credit cards
The average Australian might not have given much thought to their unused credit cards, stuffed long ago into their wallets, paid off and forgotten about.
However, those cards can be grounds for a home loan refusal, regardless of whether or not they have been paid off.
With inactivity, there’s a risk of the bank closing the account, and banks are not required to notify their customers if this was to occur.
– You have a ‘high-risk’ credit history
When it comes to home loan rejections, weak credit doesn’t necessarily signify that people have had bad debt such as defaults.
Rather, it can mean they have demonstrated high-risk characteristics like excessive enquiries for unsecured debt in the form of credit cards, unsecured personal loans and the use of payday lenders.
– Most people are told by family, or perhaps another friend, [that] they need five per cent of the purchase price. But it’s actually five per cent plus costs – that is, something closer to eight to nine per cent to account for potential partial, or full, stamp duty and lender’s mortgage insurance.”
If you’re not certain that you have enough to cover all the hidden costs, it’s a good idea to set a budget and save an overflow amount to cover all bases and even access more options
-Some businesses are awarded grants by the government. However, many don’t know these grants are deducted from their overall earnings, effectively reducing their borrowing capacity.
-The bank doesn’t like the location or type of property you’re trying to get a loan for Sometimes, home owners find themselves unable to get approved for a new home loan as the property or location is too high-risk.
From the type of property to the likelihood of flooding and fires, and even the suburb you want to buy in – all can have an impact on whether you’ll get the green light from lenders, brokers say.
Source: Domain Website