Been declined? How a bad credit home loan could be right for you
You finally found that perfect home for your and your family, only to go to the bank and have your application rejected. It's frustrating, but there are many reasons traditional lenders reject home loan applications.
Fortunately, that home ownership dream may still be within your grasp with a bad credit home loan from Red Rock Mortgages.
What are some common reasons loans are declined?
There are a number of reasons home loans are declined, but most of them can be put down to this principle: the higher risk that the lender won't recoup their money (let alone profit) means a lower chance of loan approval. Some more specific examples include:
1. The security isn't good enough
In most situations, if a home loan is defaulted on, the lender gets the property to cover their loss. This fact means giving someone a loan to buy a house in a rural area that has poor capital growth prospects will be considered riskier than giving one to someone buying in the middle of Sydney.
2. Poor ability to service the loan
Banks take into account not only the income a loan applicant has, but the realistic ability they have of servicing the debt. While a person might technically make enough money, if taking on a loan means they would have to scrimp to an incredible degree, banks are more hesitant to lend to them.
3. Bad credit history
One of the most common reasons for rejection is a bad credit score. If you have things like late payments or unpaid debts on record, banks will often take this as a sign that you're not creditworthy - irrespective of the actual reason for the score.
How can a bad credit home loan help if you've been declined?
At Red Rock, we don't stop our evaluations at a bad credit score - we work with our clients to understand their financial situation and take the time to listen to why they've got to the point where they have. An illness may have cropped up, or a job loss that has meant you were unable to meet your financial commitments. With a bad credit home loan, these events don't have to stand in the way of you and a new home.
If you've had some unfortunate circumstances crop up in your life, resulting in a bad credit score, get in touch with Red Rock Mortgages today. We'll work with you and advise you on some of the ways we can help you fulfil that home ownership dream.