What Steps Should You Take When You Are Having Difficult Getting A Bank Loan?
What are some steps you could take when you’re having difficulty getting a bank loan? Hey, I’m Ryan McLean. I’m from cashflowinvestor.com.au. A couple of days ago, I asked you guys, all of my email subscribers to reply to one of my emails and let me know the biggest difficulty that you’re having with investing in property. This is one that I got back, not just from one person, but from a few people saying that they’re having difficulty getting financing. Now, some of you were more specific, saying you’re having difficulty getting financing because you’re a sole trader or you have your own business, and some of you were a bit more vague.
I just want to cover what are some steps that you can take when you’re having difficulty getting a bank loan. Now firstly, if you’re not on the email list already, then you need to get on it. Go to cashflowinvestor.com.au. Enter your name and email address. We send out daily tips to help find and invest in positive cash flow property, so a very helpful thing to be a part of. Just head over there, and sign up, and if you’ve got questions or concerns, then email me, Ryan at cashflowinvestor.com.au.
What steps can we take when we’re having difficulty getting a bank loan? Sometimes, it’s really hard to know. What should we do? Why are we even declined for a loan? Why are we even having trouble getting a bank loan? There’s a few different things that might be causing you issues in getting a bank loan. You might have low income. Your expenses might be too high. Your current debts might be too high. You might already be maxed out in terms of service ability of loans. You might run your own business, and so the banks aren’t counting your income. You might work off commissions, and so then a lot of your income, a lot of lenders won’t count.
There’s various aspects that will cause difficulty when getting a loan, and each lender is different, so you never know if it’s going to be exactly one thing. You might go to one bank, and they’ll decline you for one reason, and you might go to another bank and they’ll decline you for a completely different reason. What steps can you take to get and jump over all of these hurdles that the banks have? Well, the first step really is to find out what is the number one thing that is holding banks back from lending money to you?
Let’s step over the other side of the table and look at it from a lender’s perspective. They have criteria that they need to meet in order to lend money out because there is only so much risk that they can take. What is it about you that makes you a risky investment that no one would lend money to? That’s the thing we want to find out. Now, if we’ve been declined by a bank, I think it’s very important to ask thank you for considering me, may I just ask why you have declined my application, what is it? Hopefully, they’ll be able to tell you it’s because you don’t have these statements, or it’s because you don’t earn enough money, or it’s because you don’t have a big enough deposit.
Ask them and try and find out, and then see if there’s a way that you can rectify that situation. To take it a step further, it might be worth talking to a mortgage broker who deals with multiple lenders because they might be able to say okay look, here’s a bracket of banks that they’ll decline you because of this. Here’s a bracket of banks, and they’ll decline you because for reason B or different reasons, and they can shed more light on how you can be best presented to these lenders in the chances of getting a loan.
First step is to ask your bank why they declined you. Second step would be to speak to a mortgage broker, and to find out what other lenders think about you because maybe one bank declined you but another bank might accept you. Find out what is it that’s holding these lenders back from lending to me. Then, the third step would be to go about rectifying the situation. Maybe it’s we’re self-employed and we don’t have good enough bank statements or whatever it is we need.
Maybe we can’t get a loan right now, but you can take steps to regularly have your bank statements ready, on time, and you can maybe move your money around in your business so things look better to the banks than what they do currently because we all come around to that end of the financial year and it’s like spend money, spend money so you don’t have to pay tax. Well, maybe that’s a good thing to save tax, but maybe it’s not a good thing for buying property because it looks like you don’t make any money in your business. Think about those things and what you can do to rectify the situation.
If you need a bigger deposit, how can you get a bigger deposit? Find out what is causing the issue and try and rectify it. If you can’t rectify that one particular issue, then see if you can find another lender who will accept you. There are some lenders out there who aren’t the big four banks, that may be able to help you out. They might try to charge a higher interest rate, or they might structure their loans differently, and you need to be aware of that, but you might be able to get in using a second or third tier lender.
I hope that has helped. There’s just a couple of steps that you can take when you’re having difficulty getting a loan. Unfortunately, there doesn’t seem to be silver bullet out there that’s going to guarantee that you’re going to get a loan from any lender whenever you want, for the exact amount of money you want. Lending is much tighter than what it has been in the past, so it’s important to understand why banks lend money, why banks hold back on money, and so you can present yourself in the best light to the banks.
This is Ryan McLean from cashflowinvestor.com.au. Again, if you want daily tips on how to find and invest in positive cash flow property, then sign up for our news letter. Just go to cashflowinvestor.com.au, and enter in your name and your email address. Than