Refinancing a Home Loan With Bad Credit
Refinancing a home loan isn’t always simple if you have bad credit. Depending on the type of credit problem you have and the circumstances surrounding it, some mortgage lenders will hit you with high interest rates or turn you away altogether. But that doesn’t have to be the case.
We work with expert mortgage brokers who have strong relationships with lenders across Australia, and they can help you find the most favourable refinance rates available.
Our guide to refinancing a mortgage with bad credit covers the following topics…
Read on or click a link to jump ahead:
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[/vc_column_text][vc_row_inner][vc_column_inner width=”1/3″][/vc_column_inner][vc_column_inner width=”1/3″][tek_button button_text=”Get Started” button_link=”url:https%3A%2F%2Fwww.onlinemoneyadvisor.com.au%2Fcontact-us%2F|||” button_position=”button-center”][/vc_column_inner][vc_column_inner width=”1/3″][/vc_column_inner][/vc_row_inner][vc_empty_space][vc_separator color=”purple”][vc_empty_space][/vc_column][/vc_row][vc_row full_width=”stretch_row”][vc_column offset=”vc_hidden-lg vc_hidden-md”][vc_separator color=”purple”][tek_calltoaction cta_icon_type=”no_icon” cta_title=”We’ll match you with your perfect mortgage broker” cta_subtitle=”Save time & money with an expert who specialises in cases like yours.” cta_text_color=”#000000″ cta_button_link=”url:https%3A%2F%2Fwww.onlinemoneyadvisor.com.au%2Fcontact-us%2F|||” cta_button_text=”Get Started”][vc_empty_space height=”50px”][vc_separator color=”purple”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]How can I refinance my house with bad credit?
This is a case of finding the right bad credit mortgage lender. While some home loan providers will approach a bad credit refinance application with caution, specialist bad credit lenders are flexible enough to take the age, severity and reason for your credit issues into account.
To put this into context, older credit issues (especially ones that have been fully settled) are easier for lenders to overlook than recent instances of bad credit. Bankruptcies are typically considered the most severe type of bad credit and will need to have been discharged before you’re approved for a refinance deal, while paid credit defaults are seen as less of an issue.
Bad credit that is the result of general financial mismanagement might be considered more of a red flag by home loan providers than problems caused by an unexpected life event, especially if your financial conduct has been responsible since this issue was recorded.
While finding the right specialist lender is the key to refinancing a property with bad credit, there are steps you can take to boost your chances of approval.
Read on for more information…
How to increase your chances of approval
Your refinance application is more likely to be successful if you…
- Have enough equity or savings to keep the loan to value (LVR) ratio down to 80%
- Check your own credit file ahead of your application. This will give you the chance to challenge any inaccuracies and get an idea of what the lender will see on your report
- Settle any debts you’re in a position to pay off. Consolidating them might be an option but be sure to take professional advice before making a decision on this
- Apply through a mortgage broker. We can match you with one who specialises in bad credit refinance applications – see the next section for more on this
Refinancing with a low credit score
Equifax, Australia’s largest credit bureau, assigns customers a credit score out of 1,200. Anything below 509 is considered by some lenders to be higher risk, while a score that falls between 510 and 621 would be classed as ‘average’ by lenders who use credit scoring.
Those in the high risk category might struggle to get a refinance deal, if they were to approach a lender that uses credit scoring. Borrowers categorised as average might need more equity than somebody with a strong credit rating or have to settle for higher rates at certain providers.
Not all mortgage lenders use credit scoring. The ones which don’t won’t be concerned about the numerical rating attached to your credit file as they assess refinance applications on a case-by-case basis.
If you think there’s a chance a lender might turn might reject your application because of your credit score, make an enquiry. We can match you with a broker who has access to specialist mortgage providers who don’t base their lending decision on credit scores.
How to get the best refinance deals with bad credit
Apply through a mortgage broker who specialises in cases like yours! This is the best way to ensure you have access to the best deals when switching home loan products. If you research the market yourself or go direct to a mainstream bank, you run the risk of potentially missing out on a superior deal from a provider who isn’t on your radar.
The experts we work with have access to specialist refinance providers across Australia and they know exactly which ones are best positioned to offer favourable rates to customers based on their needs, circumstances and credit report. We can match you with a mortgage broker who has the right expertise for you, and we won’t charge a fee for this.
Refinancing a home loan for debt consolidation purposes
Debt consolidation mortgages are refinance products that are available to customers with multiple small debts that have become unmanageable. They allow you to refinance and roll your debts onto your home loan, so you’d be paying off one debt rather than several.
The debt plus the refinance loan will need to be no more than 80-90% of the property value, as far as most lenders will be concerned. The majority of mortgage providers will also prefer customers with no missed home loan payments in the last six months.
If your debt is with the Australian Taxation Office (ATO), there is a specific type of debt consolidation mortgage you can use to roll the debt onto your home loan. Tax debt mortgages are typically available at 85% LVR and the lender will likely want to know the cause of your debt.
If you’re looking for a debt consolidation remortgage, make an enquiry and we’ll match you with a broker who can offer bespoke advice on these products and help you get the best deal.
Speak to an expert
Mortgage renewal with bad credit can be complicated and trying to find the best deal yourself comes with the risk of rejection or ending up with unfavourable rates.
But that doesn’t have to be the case. We work with expert mortgage brokers who know exactly which lenders are the most flexible with bad credit customers, and the most likely to offer the best refinance interest rates on the market. Get in touch with us to get started.
Make an enquiry online and we’ll introduce you to a broker for a free, no-obligation chat about your refinance application today.
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