3 Reasons Your Home Loan May Be Rejected
If you are planning to buy a property this year, you may have noticed that getting a home loan feels a bit different compared to a few years ago. Even buyers with strong incomes and healthy deposits are finding that banks are taking a much closer look at how they manage their money before approving finance.
New data shows more Australians are adjusting their spending and debt habits just to strengthen their borrowing power. This shift is influencing how buyers need to prepare before entering the market.
Here are three key factors that may be impacting your home loan approval in the current lending environment.
1. Everyday Spending is Getting More Attention
Banks are now reviewing your bank statements in detail. This includes things like takeaway meals, shopping, recurring subscription services (Netflix, Uber), and lifestyle expenses. These everyday spending patterns can reduce your borrowing capacity, even if your income is stable.
What to consider:
Start reducing non-essential spending at least 60 to 90 days before applying for a loan. This gives your bank statements time to reflect consistent, responsible money habits.
2. Credit Cards and Buy Now Pay Later Are Weighing You Down
Even if you rarely use your credit card, the limit still counts as potential debt. BNPL platforms are now treated similarly to personal loans. These credit products can reduce your borrowing power more than most people realise.
What to consider:
Close any credit cards you are not using. Clear any BNPL balances early. Reducing credit may increase how much you can borrow.
3. Future Financial Commitments Are Being Factored In
Lenders are not only looking at your current income. They are assessing whether your financial position will remain stable over the long term. Major upcoming expenses, such as upgrading cars or large personal purchases, can reduce your loan approval amount.
What to consider:
Keep your financial situation simple and predictable when preparing for a property purchase. Avoid taking on new financial commitments like car loans during the home loan application process.
What This Means for Property Buyers?
Buying in current economy isn’t just about having the deposit, it is also about how your financial profile appears on paper.
By preparing in advance, you can strengthen your loan application and increase your confidence when searching for the right property.
If you are planning to buy this year and want clarity on your borrowing position, we can assist. We help clients align their finance readiness with the right suburbs and opportunities in the current market.
Contact us and book in a time with our team to discuss your property journey and potential options.