Part 9 Debt Agreement Home Loan
Am I eligible for a home loan?
Some people who have completed their Part IX agreement can qualify for a home loan for up to 90% of the property value! Your eligibility for a home loan depends on your current situation:
Currently in a Part 9 Agreement:
If you are currently in a Part 9 Agreement then you can refinance your current mortgage to pay out your agreement. You can borrow up to 80% of the value of the property that you have if you have been in the agreement for at least 12 months and have perfect repayments for the last six months.
You can obtain a home loan with a specialist lender, typically at 2% to 4% above the Bank Standard Variable rate. You cannot get a home loan to purchase a property during a Part 9 Agreement.
Completed your Part 9 Agreement:
Once you have finished paying for your Part 9 Agreement then you can refinance or purchase a property, however you cannot borrow more than 90% of the property value. Your mortgage will be with a specialist lender, typically at 2% to 3% above the Bank Standard Variable Rate (BSV Rate).
Completed your Part 9 Agreement & have a good case:
If there is a very good reason for you getting into the Part 9 Agreement, you have made all of your payments on time during the agreement, you have strong savings, excellent employment & can provide evidence of all of this then we may be able to help you get approval with one of the major banks for up to 80% of the property value. With a specialist lender we can help you borrow up to 90%.
Part 9 is no longer on your credit file:
You can now apply for a standard mortgage at standard interest rates, however some lenders will still only lend you 80%! Two of our lenders can consider a loan for up to 95% of the property value.
***We cannot help you if you do not meet the above criteria***
Our mortgage brokers are experts in home loans for people with impaired credit. Please enquire online or give us a call on 1300 889 743 and one of our mortgage brokers will let you know your options.
Will I qualify with a bank or a specialist lender?
If you are currently in or have previously been in a Part 9 debt agreement then it will show up on your credit file and the banks are able to access this information when assessing your loan application.
A major bank can only consider your application if you have a very good reason for being in the debt agreement in the first place, have completed your agreement more than 12 months ago and are borrowing less than 80% of the property value.
The reason must be something that was not your fault, such as a major illness, otherwise the bank will simply decline your loan. You must also prove that since this problem you have made all of your rent payments on time, have saved some money on your own and have not had any more credit issues.
If on the other hand you are still currently in a Part 9 debt agreement, then the major banks will not consider your application at all.
Specialist lenders are more flexible in the way that they assess your loan, however they can still not lend more than 80% of the value of your property if you are still in a debt agreement, and they will charge a higher interest rate to compensate for the higher risk of your loan.
Our mortgage brokers are experts in home loans for people who have been in a Part IX Agreement. Please enquire online or give us a call on 1300 889 743 and one of our mortgage brokers will let you know which lenders you can qualify for a mortgage with.
Part X Personal Insolvency Agreement
If you have entered into a Part X or Part 10 Personal Insolvency Agreement then the same lending criteria will apply as if you had been in a Part 9 Debt Agreement. Please refer to the lending guidelines listed above.
What should I know about the Part 9 debt agreement?
Individuals often enter into a debt agreement as an alternative to going bankrupt. This type of agreement makes it possible for people to overcome financial hardship that is causing them to default on loan repayments or fixed expenses. A Part 9 Debt Agreement is regulated by the Insolvency & Trustee Service of Australia (ITSA) which is part of the federal government. Your name will be listed on the National Personal Insolvency Index (NPII) and will not ever be removed.
Although the prime lenders are strict on lending money to borrowers who have been in a part 9 debt agreement, there are specialist lenders who can consider your application if you are borrowing no more than 80% of the property value.
Is there an advantage to the Part 9 agreement?
Compared to being bankrupt, the Part 9 debt agreement is far more flexible and allows the borrower to have a number of options including:
- Negotiating a system of periodic payments out of your salary which is set at a level that you can afford.
- Having a moratorium arranged which is a temporary suspension of paying your debt.
- A transfer of some of your property from you to your creditor in full or part payment of your debt.
- Having an agreement with your creditor to pay less than the full amount of the debt that you owe.
What do the banks think of a Part 9 debt agreement?
It is very difficult for the major banks to approve a loan if they know that you are under the part 9 debt agreement. This is because the prime lenders like to be very cautious when lending money to a borrower who has a bad credit history as they would be placing themselves in the risk of approving a loan for a borrower who cannot make the repayments on time.
However there are still ways around getting a loan approval for your situation. There are specialist lenders who can consider your debt agreement when you apply for a mortgage, however you must meet specific approval criteria, please see below for more information.