Why a home loan ‘no’ might not be the final answer

Why do people get turned down for loans?

Bank’s home loan lending rules can change

Having your loan turned down by your bank can be a reflection of their current credit policy, which can change based on shifts in market conditions.

This means when you may have had no issues getting a home loan from your bank in better economic times, but you might be turned down today because it’s a tougher financial climate.

Boxes not being ticked

They look for regular income – so being self-employed can be an issue. Having an unusual income, irregular earnings or multiple jobs – which lots of people do these days – are still outside the traditional box for lots of lenders.

Credit history issues

Another major reason for an application to be turned down can be a person’s credit history. The big banks and other conventional 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 past credit history.

Paperwork that doesn’t meet requirements

One of the biggest issues can be not having the right paperwork, things like not having up-to-date tax returns, because you’re self-employed. Or because you’ve recently arrived in the country and haven’t built up an employment history yet.

Past bankruptcy

If you’ve filed for bankruptcy in the past this will be a flag for traditional lenders, even when you’ve been discharged.

These are all pretty normal reasons for people getting declined for a home loan.

So what do you do now?

 

The alternative world of non-bank home loans

The good news is that the world has changed a lot over the past 20 years. There are now some big, well-established non-bank lenders that can offer you a different, much more personal approach to your home loan applications. We don’t mean any fly-by-night lenders – but big organizations – like Pepper Money – who have won awards for their work in alternative lending in Australia. They were set up specifically to help people with loans when the banks said ‘no’.

With non-bank lenders like Pepper Money your application can be individually evaluated by an expert – called an underwriter – against Pepper’s loan suitability and credit assessment measures, with each individual application being evaluated on its merits by a real person and not a computer.

So always check things out with us – because when it comes to home loan applications, if you’re short on paperwork, have a bit of an unusual income, if you’ve got a few credit history issues, or even defaults or judgements against your name, there may well be good alternative lenders that can still consider your application.

They will look at why you might have any gaps and use a really good range of factors to assess your needs, objectives and – importantly – your suitability for a loan in the situation you are in. That means they will be really responsible about the lending and make sure you can manage the repayments.

Getting turned down for a home loan can really knock your confidence. If it’s happened to you, don’t just accept it and wait years to have the courage to apply again. It’s always worth checking with us first.

If you’d like more information talk to us today about how we might be able to put you in touch with a lender that can help if your bank has said ‘no’ to your loan application. Call us on 0488-994-473

Disclaimer: Original content source: Pepper Money. It is designed for publication through Accredited Brokers, to provide you with factual information only, and it is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, but neither Pepper nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on 0488-994-473

A simple guide to small business loans

A simple guide to small business loans

Small business loans can be great when you need to get your brand up and running or cover unexpected expenses. However, it’s useful to understand the difference between the available options before committing to one.

To help you make the right choice, here’s what you need to know about some of the more commonly used business loans.

Line of credit/overdraft

A line of credit involves overdrawing on your business’s bank account up to an amount approved by your financial institution. This is commonly used for short-term capital, or as a source of cash flow to keep operations running smoothly.

Pros:

  • Flexible – use funds as needed and repay at your own pace.
  • Allows you to establish a good credit history for future borrowing.
  • Simpler application process than other loan types.

Cons:

  • The bigger the overdraft, the bigger the fees.
  • May incur fees even when not being used.

Bank term loan (secured or unsecured)

A bank term loan is a medium-to-long-term loan option commonly used for purchasing equipment or covering business start-up costs. It involves borrowing form a lender and making regular repayments over an agreed period.

Pros:

  • Flexible – choose from fixed, variable, split rate or interest-only loans.
  • Allows you to borrow a larger sum over a longer term, with lower interest rates.
  • May be able to match the loan term to the life span of the underlying asset.

Cons:

  • May be subject to borrowing minimums.
  • Attracts set-up and service fees.
  • Variable rates can fluctuate, resulting in higher repayments.

Mortgage loan

A mortgage loan can be used to cover most of the upfront costs of purchasing a property for your business. The property is then used as collateral by your lender until you’re able to repay the loan amount and the incurred interest.

Pros:

  • Flexible – choose from fixed, variable, split rate or interest-only loans.
  • May offer features such as redraw facilities and no-penalty early repayment.
  • May be easier to obtain than a bank term loan.

Cons:

  • May be subject to borrowing minimums.
  • A simple guide to small business loans
  • Attracts set-up and service fees.
  • Variable rates can fluctuate, resulting in higher repayments.

Lease financing

Used primarily for equipment and vehicle purchases, lease financing means the lender owns the asset and charges the business a hire fee. At the end of the lease agreement, the

business may be able to refinance or purchase the asset.

Pros:

  • Allows you to maximise the use of your working capital.
  • May entitle you to certain tax deductions.

Cons:

  • May be more expensive than other types of financing over the long run.
  • May be subject to hefty early termination fees.

Looking for the right business loan?

Understanding how the different commercial loans vary can help you choose one that best suits your business needs. Make sure you speak with a professional mortgage broker before making any decisions to ensure your business gets the right level of financial support.

 

Make an appointment to discuss your options today. Call Sandra 0488 994 473

Simply Living Winter

Simply Living

Welcome to our Winter issue.

In this issue, we discuss the options available to you if you’re looking to buy property with others, whether it’s with a partner, spouse or a group of friends. We also talk you through the benefits of refinancing your property, for greater flexibility and a reduction in unnecessary costs.

Break-ups are difficult enough, so we’ve put together some tips on how to make the financial aspects a little more straightforward. And lastly, we take a look at the ways in which the 2018 Federal Budget will affect the national property market and what this means for buyers and sellers.

CAS Winter Newsletter

NEWS