What are my chances of getting approved for a home loan with a default?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: What are my chances of getting approved for a home loan with a default?

Post by Otto Dargan »

Hi ryanh,

It depends on how long these missed payments went unpaid. If they were overdue for more than 60 days, your partner would have gotten two defaults listed on his credit file.

There are lenders who may approve your home loan even if you have a few defaults. However, this will depend on the types of defaults that your partner have, how old they are, if they are paid and the total number and dollar value of the defaults.

To qualify with one of our lenders, you will be required to meet the following criteria:
  • Not have more than $500 in defaults to borrow up to 95%.
  • Not have more than $1,000 in defaults to borrow up to 90%.
  • Not have more than two defaults in total for one application.
  • The default must have been paid at least six months prior to applying.
  • Must have at least 5% in genuine savings if you are purchasing a property. This is typically in the form of regular deposits made into a savings account over a period of 3-6 months.
  • Must have a very good reason for a flawed credit history.
However, if you have any unpaid defaults or larger paid defaults then you will need to apply with a specialist lender and they may be able to lend you up to 90% of the property value.

It’s important that you’re aware of what defaults you have and the status of each of them in order to avoid applying with an unsuitable lender and being turned down due to your bad credit history.

We can order a credit report from Equifax, assess your situation in full and let you know if we can help you.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: What are my chances of getting approved for a home loan with a default?

Post by Otto Dargan »

Hi ryanh,

Your credit file is maintained by credit reporting agencies like Equifax and it contains your basic details and your entire credit history. This includes:
  • Your full name, date of birth, gender, address, previous address, drivers licence number, employer and previous employer.
  • Last two years history of repayments of your debts (if any).
  • Record of any company directorships (if any).
  • Loans applied for in the last five years.
  • Records of any overdue loans or accounts.
  • Court judgments.
  • Court writs.
  • Any history of bankruptcy.
Your previous credit activities can remain on your credit file for a different number of years. You should also remember that paying a default does not remove it from your credit file. Instead it is updated on your file showing that your default was paid.

Defaults (clear out) and Part IX debt agreement stay on your file for seven years whereas court writs and summons, enquiries, defaults, court judgments, and bankruptcy stay on your file for five years. Similarly, your current debt repayment history remains for two years and your last known address and employer details remain for an indefinite period in your credit file.

If you would like to know more about different types of bad credit listings then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.

We're specialists at assisting borrowing with defaults. More often than not, the default was simply an unfortunate mistake.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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