A bad credit mortgage broker specialises in “out-of-the-box” or non-conforming lending policies.
Why speak to a bad credit mortgage broker?
If you have bad credit and you’ve applied for a home loan directly with your bank, you’ve probably already felt the sting of rejection.
Not only would your application have been declined buy you probably would have been shown the door before even speaking to a human being!
That’s the problem with some banks and their reliance on credit scoring.
A bad credit mortgage broker will actually sit down and talk to you about what happened and how you managed to get your financial situation back on track.
By gather good evidence and explanations for your adverse credit history, the broker can stop you from getting unnecessarily declined and adding another credit enquiry to your credit file.
This can put in a worse off position than you were before!
Our mortgage brokers have several years of experience working in the credit departments of some of the biggest lenders in Australia including the major banks.
Because of that, they know exactly who to speak to and what lenders are looking for in a home loan application.
Call us on 1300 889 743 or complete our online enquiry form for a free, no obligation assessment of where you stand.
How are they different?
Most mortgage brokers don’t know how to help customers that are “outside-of-the-box” or don’t meet standard lending policy.
Worse still, they tend to take a negative view of people with a bad credit history, believing that they’re bad borrowers and aren’t worth the time and effort.
Our experience is that this view is totally wrong!
Most people that fall into bad credit have had an unfortunate life event such as losing their job, being unable to work due to injury or illness, business failure, divorce or separation or even the death of a loved one who contributed to the household income.
In many cases, borrowers don’t even know they have a black mark on their credit file!
Many of these people are just after a second chance.
We find that they are actually better mortgage holders than borrowers who’ve never gotten a black mark on their credit file before. It’s true!
They have something to prove and their goal is financial freedom.
What does a specialist 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’ll 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.
Will they charge a higher fee?
Some bad credit mortgage brokers will charge exorbitant upfront fees in order to provide you with a service.
In most cases, our services are 100% free depending on the nature of your situation.
For example, if you need a home loan fast or if you’re close to settlement, we may charge a brokerage fee.
Similarly, if you’ve got a complex situation with multiple adverse credit listings, we may only be able to get you approved as an exception to policy.
In this case, you may find that there are very few brokers who can help you so we would charge a brokerage in this instance as well.
It’s all case by case!
The best thing you can do is to call us on 1300 889 743 and have a chat with one of our bad credit specialists about your situation.
We can then come back to you with some mortgage solutions and a complete cost breakdown.
Does it matter what kind of bad credit I have?
There are some types of bad credit listing that mortgage brokers and banks won’t touch.
However, 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, up to 90% of the property value with a specialist lender or up to 100% of the property value if you have a security guarantee from your parents.
- 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 90% of the property value with a specialist lender.
- Unpaid defaults: If you have any unpaid defaults then you can only borrow up to 90% 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 90% 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.
Avoid going to a payday lender!
Payday lenders can offer you small loan amounts to help you pay for unexpected costs and family emergencies.
However, it’s when you start to apply for these loans to pay off other debt, like your credit card or a personal loan, that you put yourself into an even worse position.
Many payday loans charge interest upwards of 20% of the borrowed amount in addition to a monthly interest rate.
You may find that a better option is for you to refinance your mortgage to a specialist lender and consolidate your extra debt.
Although you’ll pay a slightly higher interest rate with a specialist lender compared with a major bank or prime lender, it’s still a fraction of what you’ll pay with payday finance.
Our bad credit mortgage brokers can help!
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.