The perfect home loan application
What lenders are actually looking for, the common reasons applications get declined, and how to fix your file before submission.
What lenders actually assess
Australian lenders run two parallel assessments: serviceability (can you afford the repayments at the assessment rate, currently 3% above the actual rate) and credit history (your repayment behaviour). Both have to pass.
The single biggest serviceability killer is undisclosed credit cards and BNPL accounts. The lender pulls your full credit file — every Afterpay, ZipPay, and credit card limit you forgot about reduces your borrowing capacity.
The 3-month spending audit
Lenders go through three months of bank statements line by line. They categorise: living expenses, gambling, transfers between accounts, BNPL, recurring subscriptions. Anything that looks like a hidden liability gets flagged.
Three months before applying: cancel unused credit cards (or reduce limits), pay off and close BNPL accounts, avoid gambling apps entirely (lenders treat any wagering activity as a red flag), and consolidate stray transactions into a single account.
- Close unused credit cards (limits count against capacity even if zero balance)
- Cancel BNPL accounts and let them clear off your file (~3 months)
- Avoid any gambling spend — it disproportionately damages assessment
- Don't apply for a car loan or personal loan in the lead-up
- Don't change jobs unless mandatory — lenders want 6+ months in current role
Common reasons applications fail
Inconsistencies between application and statements (declared rent of $400/wk but the bank statement shows $500/wk going out). Insufficient genuine savings (5% of purchase price held for 3+ months — most lenders require this for low-deposit loans). Recent missed repayments on any debt — even a single $50 telco bill can cause issues. Property issues that emerge at valuation (unapproved structures, known defects).
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