Bank Loan Cancelled? Find Out Why (2026 Guide)

You've finally received the long-awaited approval for your home loan. It feels like smooth sailing from here on out. But then you hear about someone who had their loan cancelled even after approval. Now you're worried. Could this happen to you? Understanding the circumstances under which a bank might cancel a loan after approval can save you from unexpected surprises and help you secure your financial future.

Understanding Loan Approval and Cancellation

When you receive a loan approval, it's usually a conditional approval. This means that while the lender has assessed your application and agreed to lend you the money, certain conditions must still be met before the funds are released. These conditions could include property valuations, proof of income, or other documentation. If these conditions are not met, or if your situation changes significantly, a bank might reconsider their decision.

Current Market Rates and Requirements

As of 2026, Australia's loan market remains competitive, with interest rates for home loans typically ranging from 6.49% to 12%, depending on the type of loan and the lender. Variable rates might fluctuate, while fixed rates offer stability over the loan term. To secure a loan, lenders generally require a stable income, a good credit score, and a deposit—often at least 20% of the property value.

Esteb and Co, with access to over 83 lenders, can help navigate these options, ensuring that you find a loan that meets your needs and circumstances.

Steps to Prevent Loan Cancellation

To avoid the unfortunate scenario of a loan cancellation after approval, consider the following steps:

1. Maintain Financial Stability: Avoid significant financial changes, such as switching jobs or taking on new debts, until your loan is settled.
2. Complete All Requirements Promptly: Provide any requested documentation as soon as possible. Delays can create uncertainty and risk cancellation.
3. Keep Communication Open: Regularly check in with your lender or broker to ensure you're meeting all conditions.
4. Understand Your Loan Conditions: Be clear on what is required for final approval. If something is unclear, ask for clarification.

Expert Tips and Considerations

Here are some expert tips to ensure your loan process goes smoothly:

• Use a Mortgage Broker: A broker can help you understand the specific requirements of different lenders and guide you through the process, offering peace of mind and expertise.
• Prepare for Valuation Issues: If a property's valuation is lower than expected, it might affect your loan. Be prepared with additional funds or alternative properties.
• Monitor Credit Score: Keep an eye on your credit score and rectify any issues promptly. A sudden drop in your score can alarm a lender.

Frequently Asked Questions

• Can my loan be cancelled if I change jobs? Yes, significant changes in your employment status can lead to a loan being reconsidered. It's best to maintain stability until after settlement.
• What happens if the property valuation is lower than expected? You may need to provide a larger deposit or renegotiate the terms of your loan.
• How can a mortgage broker help? A broker, like those at Esteb and Co, can offer personalised advice, access to a broad range of lenders, and help navigate complex loan conditions.
• What if my credit score drops after approval? Inform your lender immediately. A broker can help you address this issue, but it may impact your loan terms.
• Is a conditional approval the same as a final approval? No, conditional approval means there are still requirements to be satisfied. Final approval is granted once all conditions are met.
• Can I negotiate my interest rate? Yes, especially if you have a strong financial position. A broker can help negotiate on your behalf.
• What should I do if my loan is at risk of cancellation? Contact your lender or broker immediately to discuss your options and seek advice on how to proceed.