Should You Refinance Your Home Loan?

Applying for a home loan often involves more complexity than expected. You prepare the documents, calculate the deposit, submit the application — and still get declined. In many cases, there’s little explanation, which makes it even more frustrating. Knowing why a lender says no to your home loan application is the first step towards turning things around. Below, we break down 10 common reasons why borrowers struggle to secure a home loan in Australia, plus practical steps to help improve your chances. Why home loan applications get rejected (even when you think you’re ready) There’s no single formula for home loan approval in Australia, with each lender having their own risk appetite, policy quirks and eligibility criteria. If your home loan application has stalled — or you want to avoid common mistakes before applying — start here. 1. Your deposit is too small Even though some lenders accept deposits as low as 5%, anything under 20% typically triggers lender’s mortgage insurance (LMI), which adds to your costs. If your deposit is small and your application includes other risk factors (e.g. unstable income or high debt), it can push the loan outside a lender’s comfort zone. Try this: Consider saving a bit more or looking into alternative lenders who may accept low-deposit applications with fewer restrictions. 2. You have a poor or thin credit history Late payments, defaults or too many credit enquiries can damage your chances of getting a home loan approved. But even no credit history can be an issue; lenders want evidence of responsible borrowing and repayment behaviour. Try this: Request a copy of your credit file before applying. Address any red flags and avoid unnecessary credit applications in the lead-up to your home loan. 3. Your income doesn’t meet the criteria How your income is structured is as important as how much you earn. Bonuses, commissions, contract roles and casual work are treated differently from full-time PAYG income. Self-employed borrowers often get assessed on tax returns, not their actual current income. Try this: Use your most recent and complete financial documents. If you're self-employed, be prepared to show BAS statements or alternative income verification. 4. You have too much existing debt Even if you're making all your repayments on time, a large credit card limit or multiple personal loans can reduce your borrowing power. Lenders calculate your debt-to-income ratio to gauge whether you can manage more repayments on a home loan. Try this: Pay down smaller debts or close unused credit cards before applying. Reducing your overall liability can significantly improve your application. 5. Your spending habits raise concerns Lenders now assess your living expenses in detail, including subscriptions, travel and dining. Even Afterpay or buy-now-pay-later services can be a red flag. Try this: Review your bank statements for the past three months and tighten up your spending. Cancel unnecessary subscriptions and avoid large purchases before applying. 6. You’re applying for the wrong type of loan Not all home loans in Australia are the same. Applying for a loan structure that doesn’t match your profile — for example, interest-only when you’re a first home buyer — can make lenders cautious. Try this: Match the loan structure to your long-term plan. Use this to demonstrate that you’ve thought ahead and aren’t overreaching financially. 7. You’ve recently changed jobs Lenders generally prefer applicants who’ve been in stable employment for at least 6–12 months. A probation period or recent switch to a new industry can reduce your chances, especially without other strong supporting factors. Try this: If possible, wait until you're out of your probation period before applying for a home loan. Alternatively, consider lenders who are more flexible with employment history. 8. Your application lacks documentation Missing payslips, unclear ID documents or inconsistent information can delay or derail your application. Even errors like mismatched addresses can lead to unnecessary scrutiny. Try this: Double-check everything before you apply, and have all documentation ready. 9. The property you’re buying isn’t lender-friendly Unusual properties (e.g. tiny apartments, rural land or commercial/residential hybrids) may fall outside what a lender is comfortable securing a home loan against. Some locations or property types are seen as higher risk. Try this: If you’re not buying a standard home in a metro area, talk to a broker who understands which lenders specialise in alternative property types. 10. You’re applying to the wrong lenders Just because one lender said no doesn’t mean all will. Some banks are strict on policies that others are flexible about. Many people get declined simply because they applied to a lender that doesn’t cater to their profile. Try this: Use a broker who understands which lenders are a better fit for your situation, especially if you’re self-employed, a first home buyer or investing. Struggling to secure a home loan? Universal Finance Corporation can help If you've hit a wall with your application, Universal Finance Corporation can help you move forward. We work with borrowers who don’t fit the typical mould: first home buyers, self-employed professionals, high-income earners and those investing for the first time. Our team helps match you with the right lender and loan structure for your situation. Book a free consultation for personalised advice, or use our calculators to start mapping out your borrowing power today.

Jumping into the property market for the first time as an investor can be exciting, but it’s also filled with decisions that can affect your financial future. It’s not always as simple as saving a deposit and signing paperwork. If you're thinking about building long-term wealth through property investment in Australia, this guide breaks down what you need to know before you start. How to invest in property in Australia: step-by-step for first-time investors 1. Start with a clear investment goal Property investment isn’t a one-size-fits-all strategy. Before looking at suburbs or crunching numbers, define what you want from the investment. Are you aiming for long-term capital growth, short-term rental income or a mix of both? Your goals will shape everything from the location you target to the kind of property you choose — whether it’s an inner-city apartment, a suburban house or a new build in a developing area. Without a clear outcome in mind, it’s easy to get distracted by deals that look good on paper but don’t match your long-term strategy. 2. Understand what makes a good property investment A common mistake among first-time investors is thinking a property that would make a great home is automatically a great investment. That’s not always the case. Instead, focus on properties that have: Consistent rental demand — Think locations near public transport, universities, hospitals or major employment hubs. Strong potential for capital growth — Look at historical price trends in the suburb and surrounding areas. Low maintenance requirements — Newer or well-renovated properties often reduce ongoing costs and tenant issues. Tax depreciation benefits — Newer properties may offer more depreciation deductions, improving cash flow. Use objective data — For starters, read through rental yields, vacancy rates and suburb growth rates to guide your decisions. 3. Get your finances in order early Even before you’ve chosen a property investment, it’s smart to know how much you can borrow. Lenders assess investment loans differently from owner-occupier loans, and the requirements are usually stricter. Key financial steps include: Checking your credit score and clearing any unpaid debts Saving a minimum deposit of 10–20%, plus stamp duty and other upfront costs Demonstrating stable income — especially important if you’re self-employed Considering additional expenses, such as lender’s mortgage insurance (LMI) and property management fees If your income is complex or you don’t meet major bank criteria, don’t assume you're out of options — there are lenders who cater specifically to first-time investors, high-income earners and self-employed buyers. 4. Learn the loan structures that work for investors Home loans for property investment in Australia are flexible, but choosing the wrong structure can cost you over time. Options include: Interest-only loans — These reduce initial repayments and increase cash flow but don’t reduce the principal balance. Often used for short-term strategies. Principal and interest loans — Higher repayments, but you gradually own more of the property. Fixed vs. variable rates — Fixed loans offer certainty, while variable loans offer flexibility. Some investors split their loans to combine both. The best structure depends on your long-term plan. For example, if you’re planning to flip or refinance in five years, an interest-only period might make sense. If you’re buying and holding for decades, principal and interest could be more suitable. Before committing, try running the numbers. You can use property loan calculators to estimate repayments across different loan types and rate structures, helping you understand what’s sustainable for your strategy. 5. Research tax benefits and risks A big drawcard of property investment in Australia is the tax benefits — but they come with responsibilities. For instance: Negative gearing allows you to offset losses against other income. Depreciation lets you claim wear and tear on the building and its fixtures. Capital gains tax (CGT) applies when you sell, so plan your exit strategy accordingly. That said, investment properties aren’t tax-free cash machines. You’ll need to keep detailed records, lodge accurate returns and factor in the cost of insurances, repairs and vacancies. Working with a property-savvy accountant can help you make the most of what’s available without triggering unexpected tax bills. 6. Think long-term but stay flexible Markets shift, interest rates go up and tenants move out. The most successful first-time investors build resilience into their strategy by: Keeping a financial buffer (e.g. 3–6 months of repayments) Choosing properties that suit a wide range of renters Reviewing their loan every few years for better rates or terms While property investment is a long-term asset, reviewing your position regularly helps you adapt to market trends and find better-performing opportunities. Get investment loan guidance from Universal Finance Corporation Securing the right loan for your first investment property isn’t always straightforward — especially if your income doesn’t fit the standard bank criteria. That’s where a strategic finance partner can help. At Universal Finance Corporation , we match first-time investors with loan options that can maximise borrowing capacity, lower upfront costs and support long-term goals for property investment in Australia.  Looking to get started? Get in touch for a free consultation with our team to explore home loan options tailored to first-time property investors.