There are a number of things you can do when the bank declines your loan application. Of course, it’s ideal to avoid being declined in the first place – so follow these top tips from Ben Kingsley and Bryce Holdaway from Empower Wealth, to put yourself in the best possible position for an approval.

1. Shop around
Just because one bank says no, it doesn’t mean that every other bank will. This is also true for non-bank lenders — commonly referred to as 2nd tier lenders — as these lenders often have the appetite to lend you money, even when the big banks say no. They usually distribute their loan offering via a mortgage broker, so get them to do the shopping around for you.

2. Review existing debts
Closing out or consolidating your debts to reduce your monthly outgoings — your expenses would result in a greater monthly surplus. This greater surplus should correlate to being able to borrow more money and potentially turn that “No” into a “Yes”.

Classic examples here are high credit cards and short-term personal loans such as car loans with really high monthly repayments. By consolidating these into a longer-term mortgage loan, you can reduce these payments significantly and potentially open up your ability to borrow more.

3. Review your spending
We briefly touched on the expenditure lever earlier. A best of breed money management system breaks down your expense items into essential and discretionary spending, and in doing so, you can stumble upon significant savings. This is particularly evident when it comes to your discretionary spending.

Several months (6 months is best) before you put forward your application. If you have cut down on your spending significantly, this is a game changer. Why? Well, as part of the lending process, the banks will look into your transactional banking and credit card spending to see what you’re spending your money on.

So if you can be a “super saver” and reduce your discretionary spending during this time, it will absolutely increase your chances of getting that loan approved and maximise your borrowing power.


For more tips, read the full article featuring an overview of what to do when your finance application is rejected in the February 2019 edition of Your Investment Property.

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