Bad credit home loans
What is a bad credit home loan?
A bad credit home loan is a type of mortgage that is offered from a non-conforming or specialist lender that can consider all situations, in particular for those of you with black marks on your credit file. It is designed to help “outside of the box” applications from regular people who don’t meet the bank’s guidelines.
Who can qualify for a home loan?
Bad credit home loans are generally suited for people who have had something bad happen to them such as a divorce, loss of job, injury or business failure which has resulted in black marks on their credit file.
Lenders dislike people who did not want to pay for their defaults or those who keep having ongoing credit problems. Please enquire online for more information on qualifying for a home loan.
What is considered to be “bad credit?”
There are many different types of impaired credit. The main types are:
- Mortgage arrears: Missed payments on your home loan. The more missed payments you have had in the last 6 months then the more wary lenders will be. Generally banks will not refinance your loan if you have missed just one repayment!
- Bad credit history: Adverse listings such as defaults, bankruptcy, judgments, court writs or too many credit enquiries on your Veda Advantage credit file.
- Lender credit history: Your past credit history with the lender you are applying for. Lenders have a very long term memory for the customers that they have had problems with in the past.
- Unpaid bills or tax: Outstanding bills such as council rates or late tax bills are a type of bad credit history that may not initially show up on your credit file but may be visible on the supporting documents you need to provide to get a loan.
- Overcommitted: If you have too many debts for your income or your total assets are less than your total liabilities then the major banks may assess you as being insolvent or beyond help.
Please enquire online to find out more about getting a home loan if you have a bad credit history. We have access to over 40 lenders, many of which can help you even if you have blemishes on your credit file.
How do non-conforming lenders work?
Non-conforming lenders are far more flexible than the major banks. The interest rates that are offered reflect on the risk that will be approaching the lender – therefore, the higher the risk of your loan then the higher the rate the lender will charge you.
They will assess your home loan application on a case by case basis and listen to your story as to what went wrong and why you need debt relief. These lenders can often rapidly approve loans to meet deadlines from the creditors.
- Generally if you are borrowing below 80% of the property value then you can get a cheaper interest rate.
- For those of you who are looking to borrow over 80% or if you have had severely impaired credit histories then the rate can be higher.
Please enquire online to find out which non-conforming lender can help you get a home loan even if you have a bad credit history.
Low doc loans with bad credit
Bad credit lenders are flexible with self employed borrowers who need a low doc loan because they cannot prove their income using financials and tax returns. In some cases they can help start up businesses for people who have an ABN that has been active or GST registered for less than 2 years.
They can accept low doc loans with an unpaid default, mortgage arrears, judgments and even discharged bankruptcy. Generally you will sign an income declaration or provide an accountants letter to prove your income.
Who are the non-conforming lenders?
We have access to many non-conforming lenders that can help borrowers get approval for a home loan despite any black marks on their credit file.
The non-conforming lenders that we deal with include:
- Bluestone Mortgages
- Liberty Financial
- Eurofinance
- Pepper Home Loans
- GE Money / AFIG
- Widebay Australia (Widebay Capricorn)
- Challenger / Interstar / TMC
- Adelaide Bank
- La Trobe Financial
- Resimac
- Mobius
- Red Z
- Provident Capital
- MKM Capital
- Seiza Mortgages
- Balmain NB
Please enquire online and one of our mortgage specialists will work out which lender is the best for your situation.
Solution focused lending
The idea of home loans for people with bad credit is to be a short to medium term fix, not a long term solution such as a second mortgage.
Did you know that it is often much cheaper to pay a higher interest rate for a few years than it is to sell your home and then buy a new one later on? The cost of selling then buying is often more than 8% of the property value!
We always set up loans with the intent of refinancing back to a prime lender in around 2 – 3 years time when your credit history is clear again. Why?
- The idea is to help you make a fresh start and allow you to keep your home. You can have a 25 or 30 year loan term that way you are never forced to refinance in a particular timeframe.
- This stops people being caught out if their personal situation changes.
You will need to repay your bad debts, clean up your credit file and then once you have a proven track record of repayments on your mortgage with no arrears you can refinance to a better interest rate.
The benefits of debt consolidation
By rolling all of your debts into one easy repayment each month it will be much easier to manage your repayments and it will reduce your overall repayments. This will prevent further damage to your credit history and you can stop your bank from repossessing your home. Now you have a “way out” instead of fighting to keep your head above water.
The possible drawback of debt consolidation
A possible drawback of debt consolidation is that you may have to pay a higher interest rate on your home loan, however overall your repayments will usually be lower. Bad credit home loans often have high exit fees for the first few years and are reduced from then on.
How can credit repair improve my credit rating?
If you fix your credit file prior to applying for a home loan then the lender will not know about the credit problems you’ve had in the past and will approve your loan as if you have clear credit.
Read more on our credit repair page and find out how the process of fixing your cad credit can benefit you when applying for a mortgage.
Can I apply for a home loan with bad credit rating?
Traditional lenders such as the major banks are unlikely to consider your application for a home loan even if you have a good reason behind the blemishes on your credit file. However, we use a unique approach to find the most suitable lender for you that can consider your situation when assessing your application.
Simply read more on our credit rating page for more information.
What information is on my credit file?
Your name, date of birth, current address, previous address, drivers licence number, employer and previous employer are information stored on your credit file.
All the loans that you have applied for in the last 5 years are a part of your credit file and they come up as “Enquiries”. Other aspects such as court judgments, court writs and bankruptcy history are saved against your credit file, to find out more read our credit file page.
How can I get finance with an equity loan?
Banks see equity releases as a problem and for this reason they have cash out restrictions. Lenders know that equity releases are more risky than a normal loan to purchase a home. Please enquire online to find out whether you are in the position to get an equity loan.
How do credit enquiries affect my home loan?
The major lenders prefer if you have made only 1 or 2 enquiries in the last 6 months. If you have made any more than this then it is most likely that your home loan application will be declined. However some non-conforming lenders are not as pedantic about the number of enquiries you have made, to find out more read our page on credit enquiries.
What if I have a mortgage in arrears?
Mortgage in arrears is if you have not made the required payments on your home loan. This includes missed payments and late or overdue payments. The major banks and prime lenders will not approve your loan if you are in this situation especially if you have only had your home loan during the last 6 to 12 months.
You will need a specialist mortgage broker to find you a lender that can consider your situation. To find out more simply read our page on mortgage in arrears.
Will my defaults show up even if they have been paid?
Defaults can show up whether they are paid, unpaid, or settled (you have made an agreement to pay part of the debt). Paid defaults remain on your file and are not removed. For more information, read our page on paid and unpaid defaults and see how this can affect your application for a mortgage.
What should I know about debt judgments?
Credit providers are very concerned when they see debt judgments on your credit file as this is an indication that you are or may have previously been in financial trouble. Please read more on our judgment page to find out which lender can consider your loan application despite having a debt judgment record on your credit file.
What are court writs?
A court writ is a formally written document that is issued by the court. Warrants, prerogative writs and subpoenas are all types of writs that refrains the person it is addressed to, from doing a certain act. The major lenders in particular are wary if they can see that you have been issued with a court writ in the past.
What are court summons?
A court summon is a legal document issued by the court for various purposes. A Judicial summon is a type of court summon that is addressed to a defendant in a legal proceeding. The summons will inform the person to whom it is directed to that a legal proceeding has been started against them and that a file has been created in the court records.
Can I get out of bankruptcy before being discharged?
Yes. You are able to get out of bankruptcy before being discharged if you get the bankruptcy annulled. An annulment cancels the bankruptcy entirely, which removes you from being bankrupt. To find out more, read our page on bankruptcy.
What is the advantage of a Part 9 (IX) debt agreement?
A Part 9 (IX) debt agreement is an alternative to going bankrupt. Debt agreements are more flexible and can include a number of options such as:
- Agreeing with your creditor to pay less than the full amount of the debt that you owe.
- A negotiated system of periodic payments out of your income which is set at a level that you can afford.
- A transfer of some of your property from you to your creditor in full or part payment of your debt.
- Arranging a moratorium which is a temporary suspension on paying your debt.
With the flexibility of the Part 9 debt agreement you are able to apply for a loan in which the banks will not consider yourself as being bankrupt.
How can a Part 10 (X) debt agreement help?
A Part 10 (X) debt agreement is a process in which a debtor may make a proposal to their creditor for consideration and a formal vote. It is a simple method for both parties to come to a mutually agreed compromise in a relatively simple way without reference to the court.
Can I get a bad credit no doc loan?
A no doc loan refers to a mortgage where the borrower does not verify any of their income. Please enquire online to find out which lender can approve your loan if you have no proof of income and have had credit defaults in the past.
Can I apply for private finance with a bad credit history?
If you have equity in a property and need to get quick cash then applying for a private finance can be of much benefit to you. Please enquire online to speak to one of our specialist mortgage brokers who can point you to the right direction if you have a bad credit history and you would like to deal with a private lender to get your application for a mortgage approved.
Am I eligible to refinance my bad credit loan?
Not everybody is eligible to refinance right to a bank loan, in these situations we usually refinance to a cheaper specialist loan before refinancing to a major lender, as major lenders tend to be very conservative when it comes to lending to borrowers who have a bad credit history. Please read our refinance bad credit page for more information.
