Serviceability is the most common reason - the lender assessed that your income is insufficient to service the loan amount you applied for, based on their assessment rate (which is typically higher than the actual rate). This does not always mean you cannot borrow; it may mean you need a different loan amount, a different lender with more generous serviceability calculations, or more time to increase your income.
Credit history issues - a default, missed payment, or court judgment - can trigger a decline with a mainstream lender. Some specialist lenders are willing to lend to borrowers with credit impairments, though the rates and terms are typically less favourable.
Property type or location can also cause a decline. Lenders have specific policies about certain property types (studios under a minimum size, properties in remote areas, high-density postcodes) that have nothing to do with you as a borrower. A different lender may have no restriction on the same property.
Insufficient deposit or genuine savings, short employment history, or income from a source the lender does not recognise (casual work, rental income, government benefits) are other common triggers.
The most important thing is to stop applying to other lenders directly. Each application creates a credit enquiry on your file. Multiple enquiries in a short period are a red flag to lenders - they suggest you have been knocked back elsewhere, which makes further approvals harder to obtain.
Contact the lender that declined you and ask for the specific reason in writing. Under responsible lending obligations, lenders are generally required to provide you with the reason for the decline if you ask. This information is essential for your next step.
Then speak with a broker. A broker can review your credit file, understand the exact reason for decline, and assess which lenders are likely to approve based on your actual situation - before lodging any further applications.
A broker has access to 60 or more lenders, each with different credit policies, serviceability calculators, and appetite for different borrower profiles. What one lender refuses, another may accept. A broker knows which lenders are suitable for your situation without needing to test them through formal applications.
The broker will review your credit file (without making an enquiry at this stage), understand the reason for the previous decline, and identify lenders whose policy aligns with your profile. When an application is lodged, it goes to a lender with a high probability of approval - not as a speculative attempt.
In some cases, the broker may recommend waiting - building savings, clearing a small debt, or waiting for a default to age - before applying. This is honest advice that protects your credit file and gives you the best chance of success.
There is no universal waiting period. It depends entirely on the reason for the original decline. If you were declined for insufficient genuine savings, you may need three to six months of demonstrated saving behaviour before reapplying. If you were declined because of a recent credit default, your options may improve as the default ages, typically after 12 to 24 months depending on the lender.
If the decline was policy-based - the lender did not accept your property type, your employment structure, or your income source - there may be no need to wait at all. A broker may be able to find a suitable lender immediately.
Jason and Steve are Adelaide mortgage brokers who work with borrowers who have been knocked back. No cost, no obligation.
The information on this page is general in nature and does not constitute financial advice. Given Finance Pty Ltd (t/a Lendology) ACN 624 144 501 is authorised under LMG Broker Services Pty Ltd ACL 517192.