Home loan declined by a Standard Bank? Here’s what to do

Article summary

• Different banks have different lending criteria, and one bank may approve a home loan application that another bank rejected.
• By employing a home loan comparison service, you can submit your application to multiple banks, increasing your chances of approval.
• The objective of a home loan comparison service is to get you the best deal, whereas when you apply through a private banker, their aim is to get the best deal for the bank.

So your home loan has been rejected and now you think your dreams are shattered. But don’t be disheartened. A rejection from a single bank is a minor misstep in the grand scheme of things.

Why? Because there are many banks, and they all have different lending criteria.

The lending criteria of banks

The most common reason for rejection is a low credit score. Your credit score is a three-digit number that tells the bank what they need to know about your financial history, such as your income, debts and so on.

600+ is considered a good credit score, but some banks will grant home loans even when the score is lower than this.

This is because banks also base their home loan packages on ever-changing factors such as the economy and the state of the property market. Furthermore, some banks may just be in a better position to lend.

The solution: Apply to multiple banks

Applying to multiple banks will not only give you a better chance of approval; it will also enable you to secure lower interest rates than you otherwise would have; because you’ll be able to compare the packages offered by the banks that do approve your home loan, and choose the best one.

Applying to multiple banks enables you to find the package that best suits your financial condition. Say, for example, you’re struggling to source the funds for a deposit. You can then try to opt for a 100% home loan instead, where the entire purchase is funded by the bank without the need for an upfront deposit.

Only some banks may be willing to grant this; applying to multiple banks means you’ll know which ones those are.

How do I apply to multiple banks?

Simple, employ a home loan comparison service, such as ooba Home Loans. We have relationships with all the big banks, and will be able to handle the paperwork and negotiate with them on your behalf.
We can also help you clear your credit record, further improving your chances of home loan approval, and of getting lower interest rates.

You can use our free, online tool, the ooba Bond Indicator, to find out what your credit score is. It helps to know this early on in the home buying process; you can then decide whether to devote time to improving your credit score, or apply to multiple banks to improve your chance of approval (we can, of course, help you do both at the same time).

Using a home loan comparison service versus applying through your bank

Some home buyers prefer the familiarity of applying for a home loan through their private banker, whom they may already have a relationship with. This is understandable, but it needs to be kept in mind that the private banker’s main priority is to secure a good deal for the bank, not the client.
Either way, if you already tried that route and had your home loan rejected, a home loan comparison service such as ooba Home Loans provides an alternate route to home loan approval.

We also make the home buying process easier by providing a range of tools. Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.