Rejection is really despairing especially when it comes to a home loan application.
But lenders are not created equal so it doesn’t mean that just because one bank said no, others will say no as well. Don’t give up just yet and instead of yielding to shame, anger or any other usual emotions brought by rejection, you should maintain a sensible attitude since clear-eyed determination may eventually land you a loan.
1. Don’t Give Up
The journey only stops when the keys to your dream home are in your hands. Regroup your documentation and apply again. Don’t get disheartened for there will be a lender out there that is matched to your needs and budget.
2. Reality Check
Make sure that the amount you’re borrowing is in line with what you can actually afford on repayments. Have a look at your current finances and factor in your monthly expenses. Make sure you’re meeting repayments on time for your financial commitments such as credit cards and personal loans.
It’s also a good idea if you can provide evidence of a solid savings pattern.
3. Find Out Why You Were Rejected
The key to understanding what needs to be fixed is to identify the root cause. Why were you denied? What were the things that lead to your denial of credit? Your lender should be able to tell you the reason/s why you were denied. This will give you the opportunity to rectify the situation and find a fix tailored to the problem.
Your lender can also give you advice on how you can improve your financial situation to give you a better chance of approving your next loan.
4. Check Your Credit Report
Lenders use your credit report to determine if you’re a risk, so if you’re declined because of a credit fault, then it’s best to take note of it and see if you can solve or dispute it before applying again. Get your finances in check, fix any errors such as fraudulent collections or cancelled accounts, and identify other methods to improve your score. Paid defaults can still paint a poor picture, so have a good explanation prepared for the lender to consider.
5. Be Honest
A rejection isn’t something to be proud of but by sharing this information with your next lender or mortgage broker, then they can proceed with caution to make sure that you won’t be declined for the same reasons. A little honesty can go a long way and can even help ensure your application is successful.