What to do when the banks turn you down
Estimated read time: 2 Minutes
Having a home loan application turned down happens to thousands of people every year. But if it happens to you, don’t be discouraged - just because you've been turned down by the banks doesn’t always mean you can’t achieve your property ambitions or refinance your home loan.
We’ve helped thousands of borrowers in unique situations with our flexible approach to lending. Since we assess you as an individual, we look beyond your credit score to find out why payments were missed, or a default happened. Often there’s a reasonable explanation and we’re here to listen.
Major banks’ existing home loan processes
It’s possible that you may have your application for a loan rejected by a traditional lender because of their current credit policy. These polices can loosen or tighten based on market conditions and their risk management processes.
So whereas you may have had no issues getting a loan from a bank in better economic times, you could be rejected because of a tougher climate.
Another reason that an application may be turned down could be your credit history. Many major banks and traditional lenders use an automated credit scoring process, which means your application might be declined simply because a computer gives your application a score based on your credit history. Non-bank lenders typically offer a more bespoke service.
Non-bank home loan processes
Non-bank lenders, like us, offer a different approach to home loan applications.
Where a bank may decline your mortgage application because you don’t tick all the boxes, many non-bank lenders consider your individual circumstances when assessing home loan applications.
Let’s look at an example. Let’s say that you don't have up to date tax returns because you’re self-employed, which led to a bank rejecting your application because you don’t fit within their loan suitability and credit assessment criteria.
Whereas a non-bank lender, like us, would assess your application individually against our own loan suitability and credit assessment criteria. Each application is assessed on its individual merits, by a person. So, in this example, it’s possible that your home loan application that had been rejected by a bank, might be approved with Pepper Money.
If you have defaults or judgements against your name, we can still consider your application and you may still be eligible for a Pepper Money Home Loan.
We’re more concerned with assessing why the defaults and judgements occurred, your current means of income, your ongoing ability to repay the loan without incurring financial hardship, where the property is located and the size of your deposit. We assess a range of factors so that we can understand your requirements and objectives for the finance.
Turned down for a home loan?
A non-bank could offer more flexible options.
Having a home loan application turned down happens to thousands of people every year. But if it happens to you, don’t be discouraged. We look at the options available.
Male: Hey Sarah, I've got a friend who's been turned down for a home loan and they're not quite sure what to do next.
Pepper Money: For a start, please tell them not to take no for an answer. Getting a home loan application declined by the banks happens to lots of people but the good news is there can be another way.
Non-banks could offer more flexible loan options that could turn a no into a yes depending on the situation so always worth checking. But before you go, here's some important legal stuff.
We’re here to help
Many borrowers feel overwhelmed once they’ve been declined and then wait years until they pluck up the courage to apply again. But you don't need to wait for a bank to lend to you.
At Pepper Money, we believe everyone has the right to achieve their financial goals and we make it our mission to offer other avenues that traditional lenders may not offer. So contact us today on 137 377 or enquire online about how we may be able to help when the major banks say ‘no’ to your loan application.
Contributor | Neil Culkin, Head of Credit and Settlements
Neil has a 20-year career in credit provision. At Pepper Money, he oversees the underwriting and credit control of all consumer finance loan applications. He is also responsible for updating lending policies and guidelines. Read more.
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Resources to help with credit issues
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Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.
All applications for credit are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply.
The results of the borrowing power calculator are based on information you have provided and is to be used as a guide only. The output of the calculator is subject to the assumptions provided in the calculator (see 'about this calculator') and are subject to change. It does not constitute a quote, pre-qualification, approval for credit or an offer for credit and you should not enter commitments based on it. The interest rates do not reflect true interest rates and the formula used for the purpose of calculating estimated borrowing power is based on the assumption that interest rates remain constant for the chosen loan term. Your borrowing power amount will be different if a full application is submitted and we complete responsible lending assessment. The results in the calculator do not take into account loan setup or establishment fees nor government, statutory or lenders fees, which may be applicable from time to time. Calculator by Widgetworks.
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