Securing a loan approval in today's property market requires more than just having a steady income and good intentions. Unfortunately, many borrowers unknowingly sabotage their own applications through preventable mistakes that can lead to delays, higher interest rates, or outright rejection.
At Nurse Loans, we've seen countless applications that could have sailed through the approval process if borrowers had simply avoided these common pitfalls. Whether you're a first-home buyer or looking to refinance, understanding these mistakes before you apply can save you months of frustration and potentially thousands of dollars
1. Failing to Check and Improve Your Credit Score
Your credit score is the foundation of your loan application, yet many borrowers apply without knowing where they stand. This oversight can be particularly costly if you discover issues only after a lender has already conducted a hard inquiry.
Common credit-related mistakes include:
- Not obtaining a free credit report before applying
- Failing to dispute incorrect information on your credit file
- Making multiple loan applications within a short timeframe
- Ignoring small debts that could impact your score
Before submitting any application, obtain your credit report from at least one of Australia's three main credit reporting agencies. If you find errors, dispute them immediately, as this process can take several weeks. Pay down existing debts where possible, and avoid applying for new credit cards or loans in the months leading up to your mortgage application.
2. Providing Incomplete or Inconsistent Documentation
Lenders require extensive documentation to assess your financial position, and incomplete submissions are one of the fastest ways to delay or derail your application. Many borrowers underestimate the paperwork involved or provide inconsistent information across different documents.
Essential documents you'll need include:
- Recent payslips and employment contracts
- Tax returns and Notice of Assessment from the ATO
- Bank statements for all accounts (typically 3-6 months)
- Details of existing debts and credit facilities
- Proof of savings and deposit source
- Identification documents
Ensure all information is consistent across documents. If your payslips show a different address than your driver's licence, or if there are discrepancies in your employment dates, be prepared to provide explanations and supporting evidence.
3. Overlooking Living Expenses and Financial Commitments
Many borrowers focus solely on their income when calculating borrowing capacity, forgetting that lenders scrutinise expenses just as closely. Underestimating your living costs or failing to declare all financial commitments can result in your application being declined or approved for less than expected.
Lenders use the Household Expenditure Measure (HEM) as a benchmark, but they'll also examine your actual spending patterns through bank statements. Be realistic about your expenses and don't forget to include occasional costs like annual insurance premiums, vehicle registration, or subscription services that might not appear in a single month's statements.
Commonly overlooked expenses include:
- Buy-now-pay-later arrangements (Afterpay, Zip Pay)
- Gym memberships and subscriptions
- Child support or maintenance payments
- Regular transfers to family members
- Investment property costs
4. Changing Jobs During the Application Process
Employment stability is crucial for loan approval, yet some borrowers change jobs while their application is being processed. This can completely derail your approval, even if your new role offers better pay or conditions.
If you're considering a job change, it's generally better to complete your loan application first. If you must change jobs during the process, inform your broker or lender immediately. Some lenders may accept a new employment contract, but others may require you to restart the application process entirely.
For self-employed borrowers, avoid making significant changes to your business structure or taking on new business partners during the application period, as these changes can complicate the assessment process.
5. Making Large Purchases or Financial Changes
The period between application and settlement is critical, and many borrowers don't realise that lenders often conduct final checks before settlement. Making large purchases, taking on new debt, or significantly changing your financial position can jeopardise your approval at the last minute.
Avoid these actions during your application:
- Purchasing expensive items on credit
- Taking out personal loans or increasing credit card limits
- Making large cash deposits without clear documentation
- Changing bank accounts or closing existing accounts
- Co-signing loans for family or friends
If you must make any significant financial moves during this period, discuss them with your broker first to understand the potential impact on your application.
6. Choosing the Wrong Lender or Loan Product
Not all lenders are created equal, and not all loan products suit every borrower's situation. Many people simply approach their existing bank without shopping around, potentially missing out on better rates or more suitable loan features.
Different lenders have varying appetite for risk and different assessment criteria. A lender that declines your application might do so for reasons that another lender wouldn't consider problematic. This is where working with an experienced mortgage broker becomes invaluable, as they understand each lender's preferences and can match you with the most suitable options.
Consider factors beyond just the interest rate, such as offset account options, redraw facilities, and the lender's reputation for customer service and processing times.
7. Going It Alone Instead of Using Professional Help
Perhaps the biggest mistake borrowers make is attempting to navigate the loan application process without professional guidance. The mortgage market is complex, with over 40 major lenders in Australia, each offering dozens of different products with varying criteria.
A qualified mortgage broker can help you avoid the mistakes outlined above while also providing access to lender deals that aren't available to the general public. They can structure your application to present your financial position in the best possible light and guide you through potential complications before they become problems.
Take the Next Step with Confidence
Avoiding these common mistakes significantly improves your chances of loan approval and can save you considerable time and stress. However, every borrower's situation is unique, and what works for one person may not be suitable for another.
At Nurse Loans, our experienced team of finance and mortgage brokers specialises in helping Australian borrowers navigate the complexities of loan applications. We understand the current lending landscape and work with multiple lenders to find solutions that match your specific circumstances.
Don't let preventable mistakes derail your property dreams. Contact Nurse Loans today for a consultation and take the first step toward securing your loan approval with confidence.
