Example: Manit has trouble getting a loan approved
Manit has just signed a contract to buy a two-bedroom apartment in an inner-city Melbourne suburb. Her credit score is excellent and she has used a borrowing capacity calculator that suggests she can comfortably afford the $500,000 property with her 20% deposit.
But when applying for a home loan, Manit's lender informs her there's a problem. Due to the high number of existing apartments in the postcode Manit is buying in, the lender feels lending to her is riskier. The lender is willing to provide her 70% of the property's value, meaning she needs a 30% deposit. This is more than Manit can afford. Luckily, Manit hasn't completed the application and is able to cancel it and find another lender.
This time, she calls the lender first and asks if there are any lending restrictions on apartments in her postcode. When she learns there are no issues, Manit completes an online application with the new lender.