5 Reasons Banks Decline Property Loans and How We Can Help

Navigating the process of getting a property loan can feel overwhelming, especially in Auckland’s competitive property market. Rejections from banks are disheartening, but understanding the common reasons behind these decisions can help you prepare and find solutions. Here are the five most common reasons banks decline property loans—and how we can help you overcome them.

1. Low Deposit or Loan-to-Value Ratio (LVR) Issues

In Auckland, where property prices are high, having a sufficient deposit is crucial. Banks often require a deposit of at least 20% for residential properties, but many borrowers fall short of this threshold.

How We Can Help

We connect clients with alternative lenders and structured finance options. Additionally, we guide you on strategies like leveraging KiwiSaver withdrawals, family gifting, or utilizing equity from existing properties.

2. Poor Credit History

Your credit score is one of the first things banks assess when reviewing property loan applications. Missed payments, defaults, or high debt levels can lead to rejections.

How We Can Help

We provide tailored advice to help you improve your credit profile before applying for loans. If time is tight, we also work with lenders who are more flexible with credit histories, giving you a second chance at securing the funding you need.

3. Unstable or Insufficient Income

In Auckland, where property prices can stretch budgets, banks scrutinize your income for stability and consistency. Those with casual, part-time, or self-employed incomes may face challenges meeting bank criteria.

How We Can Help

We specialise in helping self-employed individuals, contractors, and small business owners present their financials in ways that lenders understand. Whether it’s providing income verification solutions or working with niche lenders, we’ve got you covered.

4. High Debt-to-Income Ratio (DTI)

High property prices especially in Auckland often lead to larger loans, which can push your debt-to-income (DTI) ratio beyond acceptable levels for traditional banks.

How We Can Help

We take a holistic approach to assessing your financial position, helping you find ways to reduce debt or connect with lenders who offer more flexibility with higher DTI ratios.

5. Property Type or Location

Banks often view certain property types—such as apartments under 50 square meters—or homes in less popular areas as high-risk investments.

How We Can Help:

We work with a range of lenders who are willing to finance non-standard properties, helping you secure funding for the type of property that meets your goals.

Final Thoughts

Don’t let a loan rejection stop you from achieving your property goals. With our expertise in the property market, we’ll guide you through the challenges and find the right lender for your situation. Reach out to us today and take the first step toward owning or investing in the property you’ve been dreaming of.