What Is A Bad Credit Mortgage Broker?
A bad credit mortgage broker specialises in “out-of-the-box” or non-conforming lending policies.
They’re experts in helping borrowers with black marks on their credit file who need a home loan, whether they want to buy a property or refinance their current mortgage and consolidate debt.
If you have defaults, judgments, a large number of credit enquiries or you’ve declared bankruptcy in the past, it pays to have a bad credit mortgage broker on your side.
What Does A Bad Credit Mortgage Broker Do?
The bad credit mortgage broker will ask for the same personal information as if you were applying for a standard home loan.
This includes your latest payslip, a copy of your current drivers licence and a completed short application form where you detail your asset and liability position and how much you’re looking to borrow.
You will need to provide explanations for each of the black marks on your credit file, including:
- When they occurred
- How much they were for
- how you were able to move past the problems you had in the past
- Why you’re in a better financial position now
The best thing you can do is be honest and open about your adverse credit. In that way, you have a better chance of getting approved.
If you don’t qualify, the broker can at least explain what you need to do to become qualified.
Often it’s just a matter of waiting for your black marks to clear from your credit file or reducing your current debts.
After a couple of years of making perfect repayments on your mortgage, the broker can then refinance you to a sharper interest rate with a prime lender such as a major bank.
Why Use A Bad Credit Mortgage Broker?
A bad credit mortgage broker will take a careful look at your credit history and find specialist lenders who might be able to overlook your credit score/rating and offer you a home loan.
Benefits of speaking to a bad credit mortgage broker:
- They can connect you to specialist lenders who are more willing to treat borrowers on a case-by-case basis.
- They can make sure you don’t have more credit enquiries pile up on your credit file. When you speak directly to a bank there’s a good chance you’ll make your credit history worse.
- They know which lenders should be approached for the specific needs of each borrower.
- They have a deep and thorough understanding of solutions specifically tailored for borrowers who don’t fit the traditional lender’s criteria.
- They are qualified and experienced in structuring and advising on the most suitable mortgage finance for your particular situation and needs.
- They can help you repair your credit file so that you can be eligible for a home loan.
What Types Of Bad Credit Do Lenders Accept?
There are some types of bad credit listing that mortgage brokers and banks won’t touch.
However, at Home Loan Experts, we have the skills and credit knowledge to tackle many types of bad credit including:
- Small paid default: If you have a small default for less than $500 and it has been paid more than six months ago then we can help you borrow up to 90% and in some cases 95% LVR (of the property value).
- More than one small paid default: If you have less than $1,000 in paid defaults from financial institutions (such as a bank) and less than $500 in paid defaults from non-financial institutions (e.g. phone companies), then you can borrow up to 85% or possibly 90% of the property value.
- Moderate paid defaults: If you have up to $3,000 in paid defaults we are able to help you borrow up to 80% of the property value with a prime lender, or up to 85% of the property value with a specialist lender.
- Large paid defaults: Larger paid defaults from $3,000 to $500,000 can be considered on a case by case basis if you have a very good explanation which is backed up with strong evidence. We can lend up to 85% of the property value with a specialist lender.
- Unpaid defaults: If you have any unpaid defaults then you can only borrow up to 85% of the property value with a non-conforming lender. Many lenders require you to pay the defaults before the loan is approved.
- Judgments or court writs: If you have any judgments or court writs then you can borrow up to 85% of the property value with a non-conforming lender.
- Part IX agreement: Please refer to our Part IX agreement page for more information.
- Bankruptcy: Please refer to our bankruptcy mortgages page for more information.
Do Bad Credit Mortgage Brokers Charge Fees?
We are paid by the banks for introducing loan applications and for doing some of the work that would otherwise be completed by one of their staff.
As a result we do not need to charge a fee for most loans. However there are a few exceptions.
We may charge a brokerage fee in the following situations:
- If you need a home loan fast or if you’re close to settlement
- If you have a complex situation with multiple adverse credit listings
- If your loan is under $300,000
We will work hard to find mortgage solutions and present these to you with a complete cost breakdown.
Speak To A Bad Credit Mortgage Broker Today
Our specialist mortgage brokers have experience working with both major banks and non-conforming lenders across Australia. We understand how to present complex applications and improve your chances of approval.
Please call us on 1300 889 743 or complete our free assessment form to speak with one of our bad credit mortgage brokers.
If you need free financial counselling, call the National Debt Helpline on 1800 007 007.