Home Loan - Declined - "Credit Rating"

Hi all,

I was declined by BW today for a home loan due to "Credit Rating". Details for the loan:

• Went through a broker that checked my credit and couldn't see any issues
• I earn ~110K no loans, credit cards, etc
• No assets of value - Car etc is provided by my work
• Went for a >95% LVR with non-genuine savings policy w/ BW - I have approx 28k in my account, of which 7.5k is my own savings, 9k is tax and rest is gifts. the $7.5k was saved into a term deposit for my Nanna to help her interest and for me to not spend my savings

where I think I was declined:

• 2018 I separated from my ex-husband. We had a house together, unfortunately, it sold at a loss of 30K.
  
• At the time CBA told us we needed to come up with the shortfall and couldn't help us... of course, I panicked not knowing better and applied for a loan to try to cover my half of that, and a small amount for a holiday
  
• Was given pre-approval, then declined as I was honest what it was for - no banks loan for a shortfall... never knew that. Thanks, CBA.
• In the end, we went to the CBA branch and deadpanned them and said we didn't have the money, I honestly thought I'd have to go bankrupt or something. I was really defeated at this point.
  
• They then proceeded to tell us about LMI, etc. Genworth took on the shortfall then passed onto their credit provider. We paid the amount in full (nearly 4 months later - it took that long for the bank then Genworth to pass it on) as soon as it was provided to their debt collector for to pay out as I saved as hard as I could to do so.
• At the time we were told this would not show on our credit report as it is not a default. Think that might be a lie.
• CBA and Bankwest both use Genworth for LMI... I didn't put the dots together until I was declined today.

I am not sure how to proceed now if it is even worth me trying again. I am not sure if the above will impact further applications? I am able to get my hands on an additional 10-15k to assist the deposit/LMI but not enough to get 20%.

Am I wasting my time applying with other banks?

 

Bankwest is owned by CBA, there probably wasn't ever any hope with them.

I had a client once who owed ANZ $8,000 and didn't tell me. Guess where we put it - ANZ without knowing. They said they would never lend to him again.

 

Did your broker know about the debacle with CBA?

 

I will own this - Looks as though I did divulge everything via email to the broker, but not the name of the bank the shortfall was with.
I was honest with my history, assets, etc in my initial email and did say I was happy to provide further information if he needed it. I guess not being from WA and only being here for a few years that I didn't know the link between CBA and BW.

I am not too worried about that now, it is done and there's nothing I can do to change that - I guess I am more worried that will impact any future applications I have with other banks? If it is a major black mark then it just won't be worth my time proceeding with any more home loan applications.

 

I’m surprised your broker didn’t ask who the shortfall was with.. seems like a basic question to help determine which bank/group to avoid..

 

Thanks for your replies guys.
Do I actually have a chance with another lender that uses a different LMI or is this a big black mark?

 

This part right here is the real problem. Your credit score might be fine for most deals, but borrowing 95% plus the LMI brings the LVR to about 99% will make the most generous lender nervous. On top of that you're relying on not having genuine savings. Unfortunately a 'good' credit score may not be enough.

If you're determined to proceed you might get it to work with a non-conforming lender. It's a bit out of my own speciality, but I do know that the loan will cost an arm and a leg - if you can find a lender.

Here's what I'd do...

Drop this purchase and save a little longer, or hold the money you've got to establish 5% genuine savings (3 months should do it).

If you're a first home buyer, you'll probably qualify for the FHLDS. This means you can purchase at 95% without LMI and stamp duty. You'll only need 5% (genuine savings), plus about $3k for costs.

Credit score requirements for this type of loan are similar to that of an 80% loan, this loan is fairly easy to qualify for.


If you're not eligible for FHLDS or a first home buyer, aim for a 12% deposit plus the purchase costs (may or may not include stamp duty depending on the circumstances). This puts you in line for a 90% LVR loan. Again this is fairly straight forward for quite a few lenders, even if it's not genuine savings.

 

Sorry to ask the obvious question, but have you gotten a copy of your credit file to check over it?
If not, do so. Its hard to know how other lenders would treat you, without knowing what your credit file actually looks like.

 

the banks are quite nervous now, at the moment they have no appetite for any commercial property loans, even if the equity in your PPOR match that borrowing amount.

 

Need to get a bit more savings together and go for a 95% including LMI loan (or said another way about 91.5% + LMI)
+
Use a lender who uses QBE and their insurer.

 

Thank you for your feedback guys.

I have been able to come up with extra funds to get me on 90% LVR. Broker wants to have another go, believe it is due to my history with CBA/BW in the past 3 years, not the LMI - confirmed with rejection forms. However, safety first and going with another bank that uses a different LMI and that I have not banked with.

I have had a few independent brokers look over my credit file and have said it's not bad at all...

Worst case this ruins my credit, I hold onto the funds and continue to rent and have a bloody awesome holiday in Europe with my LSL when all this craziness is over.

Cheers

 

Why don't you just have a look?

 

I did look (I requested it), but hey I am no expert and as some others do, you generally have a greyer view of your circumstances than others.

 

Credit files are incredibly simple. That's often their biggest shortcoming. Besides negative events like defaults and judgements, or new CCR credit accounts and repayment history (these are rare tbh), all that you get against your file are enquiries. Enquiries state:

• the loan amount (not always)
• the type of loan (personal, credit card, home loan, etc)
• the institution you applied with
• That institution's application number (not always)

It's then all up to the institution you're applying with to deduce everything else (why did you make the enquiry? did you even accept the loan or were you just shopping around online? Were you declined or approved? Why were you declined?).

Each bank, and LMI insurer, then takes these incomplete data points, plugs it into their customised risk scoring systems, and makes an automated decision on your risk score.

It's a far from perfect system, and I've been burned badly in the past by this for merely shopping around online, but unfortunately looking from the lender's perspective, they don't have much else they can assess you by.