What to Do If Your Loan Declined After Unconditional Approval?

What to Do If Your Loan Declined After Unconditional Approval?

Although it is rare, your loan is declined after getting unconditional approval but there are chances that your ploan declined after conditional approval. However, if it is the case, then it might be a stressful situation for you. After all, you have already been searching for the perfect home loan product for so long time. Moreover, in this blog, we’ll look at the possible causes of this scenario and what should you do if you face this situation.

What Should You Do If Your Loan Declined After Unconditional Approval?

While it is the most frustrating situation, it is also vital to remember that if an unconditional home loan was declined, then you can try again. The best solution to this problem is finding out the reason behind this situation, and then working on key problem areas to get out of this problem. Here are the most common problem areas that you can resolve for a second-round mortgage application.

  • Make Improvements to Your Employment Circumstances

Lenders always prefer a person with a stable job and can easily make home loan repayments. Therefore, make sure to aim to show that you have been working in your present job for over six months and you have a good financial position. Many of you may find yourself asking ‘ I need a loan but keep getting declined in Australia, why?’ Being self-employed can be a reason for declining a home loan because there is inconsistency in your income or work history. Your chances of getting approved will increase if you show consistent work and income for at least two years. Regardless of whether you are self-employed or employed, make sure that you have all required documents, such as group certificates, tax returns, payslips, etc

  • Clean Credit File

A credit check is an important aspect of all loan applications, hence it is essential to have a clean credit report. Therefore, it is important to check your credit history for any errors and get them resolved before checking the home loan application process. To answer your question ‘ I need a loan but keep getting declined, why?’, it can be suggested that improve your credit file first before applying for a home loan.

  • Look for Right Property

Use your time researching different properties. Off-the-plan properties might not be a good option if you are buying a home for the first time. Your loan will be declined by the lender if the construction work doesn’t get completed, or the property’s value drops. Furthermore, buying a reliable property will ensure that you don’t buy in a risky area or you are not paying more than necessary.

  • Save for a Big Deposit

The last-minute loan declined before settlement may be because of a low deposit. In such a situation, you could work out to increase your home loan approval chances by saving a bigger deposit amount. You might also choose a lender with a lower down payment requirement. For instance, some lenders provide house loans with Loan to Value Ratios (LVR) of up to 95%. As an alternative, you can be eligible for guarantor home loans with up to 110% LVR if a family member steps in. Similarly, think about asking your real estate agent to assist you in your search for a more cheap home that complements your financial situation. The required deposit will be less as a result.

  • Choose the Right Lender

Lenders vary greatly from one another. While some may be cooperative in their efforts to assist you get your loan authorised, others might not be. The first step in choosing the appropriate lender should be to determine the reasons your home loan application was turned down after receiving formal approval. The response will give you a decent notion of the lender type you should search for.


The blog offers different solutions if your loan is denied after unconditional approval. If you are facing this situation, then you can consider the solutions mentioned above. For more information, you can speak to one of our brokers at Star Homeloans where you will be guided with the right solutions.

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