Many customers with bad credit are turned down for home loans or told they\u2019ll have to settle for higher interest rates, but this doesn\u2019t have to be the case. We work with expert brokers who arrange bad credit mortgages every day, and they know exactly how to boost your chances of approval and land you a favourable deal.<\/p>\n
The advisors we work with have access to specialist lenders who provide bad credit housing loans, and this guide will give you all of the information you need before you start your application.<\/p>\n
The following topics are covered below\u2026<\/p>\n
A bad credit mortgage is a type of home loan for customers with credit issues that would prevent them from qualifying for a traditional mortgage or mean they could only get one with higher interest rates.<\/p>\n
Lenders who offer home loans for people with bad credit history have the flexibility to take the age, severity and reason for the adverse credit into account and base their lending decision on these factors.<\/p>\n
Applying through a bad credit broker, like the ones we work with, is the best way to find these specialist lenders and ensure you end up with the best deal.<\/p>\n
They work in exactly the same way as regular home loans, except the lending criteria can be more flexible. The specialist lenders who offer poor credit mortgages assess customers on a case-by-case basis and look at the following\u2026<\/p>\n
Adverse credit mortgages carry more risk for the lender, so many of the providers offering them will expect you to put down extra deposit to offset this.<\/p>\n
Make an enquiry to find out more about getting a mortgage with bad credit. We can introduce you to an expert broker for a free, no-obligation chat.<\/p>\n
The exact criteria you will need to meet when buying a house with bad credit will vary depending on the type of credit problem you have. The mortgage lenders who offer these home loans assess applications on a case-by-case basis, but most will ask for at least 20% deposit to help offset the risk posed by your credit problems.<\/p>\n
You\u2019re also more likely to be approved if\u2026<\/p>\n
Although most bad credit mortgage lenders ask for at least 20% deposit, through one of the brokers we work with, it may still be possible to find favourable deals for customers with 10% or even 5% deposit, depending on the severity of the credit issue. Make an enquiry and we\u2019ll introduce you to an expert who can help.<\/p>\n
There are home loans for customers with all kinds of bad credit, including\u2026<\/p>\n
Read on for more information about these types of bad credit home loan or make an enquiry to speak to an expert broker about your circumstances.<\/p>\n
There are two types of default that mortgage lenders look for when assessing your credit report: paid defaults and unpaid defaults (ones you haven\u2019t settled yet).<\/p>\n
It is possible to get a mortgage with unpaid and paid defaults, although the exact deals you will qualify for may depend on the size of the debt. Your choice of lenders will likely be greater if your debts have been settled in full.<\/p>\n
Through the right specialist lender, it may be possible to borrow up to 95% of the property\u2019s value with a small paid default on your file. This drops to 90% for customers with large defaults or more than one default. The same loan to value (LVR) ratio is also possible with unpaid defaults, but keep in mind that most lenders will want the debt to be repaid before approving your application.<\/p>\n
Bankruptcies are considered one of the most severe types of bad credit, so mortgage lenders will insist that the bankruptcy is discharged before they will approve an application. The longer it has been discharged for, the better, but there are specialist lenders out there who offer mortgages the day after a discharge.<\/p>\n
Part IX debt agreements remain on your file for up to seven years and are considered one of the more severe forms of bad credit.<\/p>\n
Some bad credit mortgage lenders will only consider your application if you\u2019ve finished paying off your debt, but others might be willing to approve you if the debt has been paid on time consistently. With the right mortgage provider, it is possible to borrow between 80% and 90% of the property\u2019s value under these circumstances.<\/p>\n
This is a type of bad credit remortgage product specifically for customers who are in debt with the Australian Taxation Office (ATO). Lenders will want to know the cause of your tax debt and will usually insist that the debt and the amount you\u2019re borrowing is no more than 85% of the value of your property when combined.<\/p>\n
Provided that you own real estate to secure the loan against, a tax debt mortgage could consolidate your outgoings by rolling the ATO debt onto your home loan.<\/p>\n
These refinance products are aimed at customers with multiple small debts that have become unmanageable. They work similarly to tax debt mortgages, allowing real estate owners to consolidate their debts onto their mortgage.<\/p>\n
Most lenders who offer these home loans will cap the deal at 80-90% LVR and prefer customers with no missed home loan payments in the last six months.<\/p>\n
First of all, don\u2019t contact a mainstream bank as most of them reject bad credit customers outright. You\u2019ll need a specialist lender who\u2019s happy to take the age, severity and reason for your credit issues into account. The best way to find the one for you is to apply through an expert broker, like the ones we work with.<\/p>\n
A mortgage broker can search the market for the home loan provider who is best positioned to offer favourable rates to a customer with your exact profile, but there are steps you can take before this to boost your chances of success.<\/p>\n