Reasons why your home loan application may be declined
Understand the most common reasons why home loan applications get declined, what lenders look for, and how to improve your chances of getting approved next time.
Understanding your needs is our main priority. While we strive to serve every customer, there are occasions when we may not be the best fit for your home loan requirements. Here are some reasons why.
1. Your personal financial situation
It’s possible that your personal financial situation does not meet our lending criteria. Our responsibility as a lender is to meet regulatory requirements to ensure that we do not provide a loan that is deemed unsuitable for your needs or where it’s likely that you may be unable to keep up with the repayments.
2. You were not able to provide the required documents
When you apply for an Unloan home loan, you'll need to provide documents to verify your financials. You find a detailed list of the accepted documents that can be used to verify your income in this article.
3. Your credit history has been impacted
To assess your suitability for a home loan, we review your credit history. The information below affects your overall suitability:
- Credit score
- An adverse repayment history
- Bankruptcy
- Serious credit infringements
If you would like to obtain a free copy of your credit report, you can request this within 90 days of receiving an Unloan decline letter by visiting www.equifax.com.au
4. You have unmet debt obligations
When we assess your ability to repay a home loan with us, we consider liabilities you may have such as:
- Government study debt
- Training support loans
- Credit cards
- Buy now, pay later accounts
- Any history of missed repayments
- Outstanding balances or arrears
5. You have provided ineligible security or property type
Like most lenders, we have a select list of property types that we don’t offer home loans for. These include:
- A residential property with a registered second mortgage
- Properties on Norfolk Island
- Properties that are under construction and not yet ready for occupancy (ready for occupancy is when the property is complete and available to start living in)
- Properties that are ‘Off the Plan’ (unless you’re ready to move in and have been issued an occupation certificate)
- Transportable, relocatable, or mobile homes
- Commercial property
- Five or more dwellings within one development per application
- Properties requiring the use of the Home Guarantee Scheme
- Aged care units, retirement villages, seniors living
- Specialist Disability Accommodation (NDIS Properties)
- Display homes
- Serviced apartments
- Time share
- Student accommodation
- Company title / Company share title
- Lease for life title / Licence to occupy
- Certificate of title is share in land
Where lenders mortgage insurance (LMI) is required, the following property types are also ineligible:
- Properties with a floor size less than 40m2
- Properties with a land size of 50 hectares or more
- Vacant land of 11 hectares or more
- Properties that are not 100% Residential use
- Stratum Title
- Properties with dual key access
- Properties with transmission lines less than 50 metres from nearest boundary
Please consider that all properties are subject to assessment at approval, and this list serves as a general guideline.
Other reasons
As part of the Commonwealth Bank Group, in some cases, we are required to decline an application for other reasons to protect you or us from fraud or losses or comply with Australian law. For information on accessing, amending, or filing a complaint about the credit information that we hold please visit www.unloan.com.au/privacy
This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.
Unloan is a division of Commonwealth Bank of Australia.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).
Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
