How much can I borrow?

You can get approved for a home loan even if you have several defaults on your credit file.

The types of defaults that you have, how old they are, if they’re paid, the total number and the dollar value of the defaults are all taken into account by our lenders.

  • Less than $500 in paid defaults: You can borrow up to 95% of the property value.
  • Less than $1,000 in paid defaults: You can borrow up to 90% of the property value.
  • Any unpaid defaults or larger paid defaults: You can borrow up to 90% of the property value with a specialist lender.

If you meet this criteria then please call our mortgage brokers on 1300 889 743 or fill in our free assessment form and we can help you get approved for a mortgage.

Will I qualify with a bank?

To qualify with one of our banks, you must normally meet the below criteria:

  • No more than $500 in defaults if you’re borrowing up to 95%.
  • No more than $1,000 in defaults if you’re borrowing up to 90%.
  • No more than two defaults in total for the one application.
  • You must have paid the default at least six months prior to the application.
  • If you’re purchasing a property then you must have at least 5% in genuine savings.
  • No other policy exceptions are allowed.
  • You must have a very good reason for your impaired credit history.

Meeting this criteria doesn’t guarantee that a bank will accept your loan.

All applications are assessed on their merits and all banks will credit score your application.

What if I don’t qualify with a bank?

You may qualify with one of our specialist lenders.

We can then refinance your mortgage to a bank once your credit history is clear.

Do specialist lenders accept anyone?

Specialist lenders are more flexible and can consider more defaults than the banks can.

The flip side is you’ll normally pay a higher interest rate than you would with a bank home loan.

However specialist lenders don’t just lend to anyone!

All Australian lenders want to approve low risk borrowers.

They are happy to consider people with approving a bad credit home loan but they are more conservative than the banks in other ways:

  • They accept more defaults than banks.
  • They will listen to your explanation for your bad credit history.
  • They can consider a low doc loan with less income evidence.
  • It’s very difficult to finance vacant land.
  • Few specialist lenders offer construction loans.
  • Few specialist lenders accept properties over 5 acres in size.

Can you qualify with a specialist lender?

Call our mortgage brokers on 1300 889 743 or fill in our free assessment form and we can help you to get approved for a mortgage.

Are low doc loans available?

Yes, you can get a low doc loan with defaults on your credit file.

However, the qualifying criteria can be a little complicated as specialist lenders have very different lending guidelines for low doc loans.

Please call us on 1300 889 743 to discuss this with one of our low doc specialists.

What will the lender know about my defaults?

Defaults will show up on your credit file with the status of either ‘paid’, ‘unpaid’ or ‘settled’.

A settled default is where you’ve made an agreement to pay part of the debt.

The lender will know the date the defaults were lodged, the amount of the defaults, the date they were paid (if you’ve paid them!) and who lodged the defaults.

Defaults remain on your credit file for five years from the date they were lodged.

A default will remain on your credit file even if you pay it, however, this will look slightly more favourable to lenders.

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.

This particularly true since credit agencies like Equifax (which acquired the Veda Advantage) started collecting repayment history information from accounts you have with banks, telcos and other financial providers.

What is a credit file default?

A default is a record on your credit file stipulating that you have an overdue account such as a loan, credit card, utility bill or phone contract.

It’s classed as being overdue if the payment is 60 days late or if the lender has been unable to contact you.

It’s your responsibility to make sure that all of your creditors have up to date contact information so that they can contact you if you aren’t making your repayments.

In reality, many lenders don’t manage their customer databases well so some defaults are really the lender’s fault, not yours.

Defaults are lodged on your credit file with Equifax and this information is accessed by lenders when you apply for a loan.

A default will remain on your Equifax credit file for 5 years or 7 years if the reason it was lodged was because the lender couldn’t contact you.

Paying the default doesn’t remove it from your credit file.

However, it does change the status to ‘paid’ which is seen more favourably by lenders.

How do lenders view defaults?

The banks find that borrowers often say to them that they didn’t know they had a default.

Lenders hear a lot of stories and will always assume that you did know about the default.

They simply don’t know who to believe and who not to believe!

We always recommend that you apply with lenders that can accept defaults rather than wasting your time applying with the major banks that will decline your application even if you have only had minor credit issues.

Most mainstream lenders won’t lend to people who have an impaired credit file, irrespective of the reasons.

The banks have looked at the repayment history of customers with a default they’ve approved and found that there’s a significantly increased chance that these customers will miss their repayments.

They can’t tell the good borrowers from the bad so they decline any application from someone who has defaults!

What about late repayments?

In the past, lenders only knew if you had paid or unpaid defaults listed on your credit file.

Today, many lenders have signed up for Comprehensive Credit Reporting (CCR) which means they can now see your repayment history information.

Late payments can be listed on your credit file if they’re overdue by just 2 weeks.

This is compared to getting a default listed after 60 days of no payment.

It’s far easier to drag down your credit score than it was in the past but luckily specialist lenders and select banks can still consider your home loan application.

How to apply for a home loan if you have defaults

To increase your chances of approval, you can take these simple steps:

  • Provide a default explanation letter.
  • Provide evidence to back up your explanation of the cause of your defaults.
  • Save up at least 5% of the purchase price and provide as large a deposit as possible.
  • Pay any unpaid defaults and get the credit provider to mark them as paid on your credit file before you apply for a loan.
  • Apply with a lender that can accept borrowers with defaults.

What you need to do to make sure that you get approved will depend on your situation. This is where we can help!

Please call us on 1300 889 743 or fill in our free assessment form to discuss your situation with one of our mortgage brokers.

Is this different to defaulting on your home loan?

Yes, defaulting on your home loan is where you have a home loan and you’re “in default”.

This means you haven’t met the conditions of the loan contract normally because you haven’t made the payments on time.

View our arrears / missed payments page for more information on refinancing a home loan that’s in arrears.

Can I hide my default from the bank?

No! The lenders will do a credit check and will find out about any defaults that you have.

You should tell the lenders upfront about your defaults otherwise they won’t be pleased when they find out that you withheld this information.

Some banks will decline your loan outright because you didn’t disclose this at the time of applying for the loan.

If you’re applying for a home loan with a default then you need to plan and submit your loan with evidence to back up your story to show the lender that you are a low credit risk.

Does the amount of the default matter?

Different default sizes, amounts and the time they’re paid can have a significant influence on your eligibility for a loan.

Therefore you should be aware of the following terms:

  • Clean credit: No defaults, ever.
  • Near prime: Small paid default less than $500 paid over 1 year ago or excessive enquiries on your credit file. Most lenders can approve a loan for you without any problems.
  • Below average: Paid default less than $1,000 paid over 6 months ago. Some prime lenders and major banks can lend you up to 80% on a case by case basis. Over 80% up to 90% or even 95% may be available in some cases depending on the situation.
  • Bad credit: More than $1,000 in defaults, all paid. You’d likely have to apply with a specialist lender. If you have a very good story backed up with evidence then you may be able to borrow 80% of the property value with one of our banks.
  • Serious credit impairment: More than $5,000 in defaults, some unpaid. You must use a private, specialist or non-conforming lender.

How are different default types viewed?

Settled defaults

A default is listed as ‘settled’ if you’ve come to an arrangement with the lender to pay some of the amount owing in return for the lender not pursuing the remaining debt.

This is seen more favourably than an unpaid default, although it isn’t as glowing as a default that has been paid in full.

Current defaults

A default is listed as ‘current’ if you’ve paid the overdue amount and the account is still open.

For example, if you had a default lodged on your file due to a credit card, pay the amount owing and then continue to use the card, it’s listed as ‘current’.

These defaults should be viewed the same way as a paid default.

However, inexperienced credit managers think that ‘current’ means ‘unpaid’ and will often decline your loan!

Clearout defaults

A default is listed as ‘clearout’ if the lender has tried to contact you several times and has been unsuccessful.

Clearouts will remain on your credit file for 7 years instead of 5 years like other defaults.

In many cases, the reason the lender cannot find you is because you have been overseas or have moved address and haven’t informed the lender.

Regardless of the cause, this is seen as the borrower ignoring their responsibilities.

Lenders are extremely wary when considering a loan for someone with a ‘clearout’ default.

Please discuss your situation with us in detail if you’d like to know if you’re eligible for a loan.

Apply for a mortgage

Our mortgage brokers are experts in lending to people with impaired credit.

Please call us on 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will let you know if you qualify for a home loan.

  • B Lee

    One of my friend lives in NT. She wants to buy a house as she has a consistent income now, and she wants to move out of the place that she is currently renting. Honestly, she was never wise while using credit cards. She shopped unnecessarily, and she did not paid what she owed in time. She had too many credit cards and she either did not have the money to repay them or completely forgot that she had to pay at times. Could you tell me if she falls under bad credit category?

  • Hi B Lee,

    If she didn’t make her repayments on time and usually within 3 months from when its due, it might be listed on her credit file. I recommend her to give a call to Veda Advantage and ask for a copy of her credit file.

    However, there still are lenders who would consider late repayments and defaults and lend up to 95% depending on the size of the default.

  • Dominic

    I had a default of $4,200 lodged in my credit file and it’s now fully paid off. I would like to get a home loan but I’m worried this will be a major issue. Can I still qualify for anything?

  • Hello Dominic,

    Paid defaults of more than $1,000 means that you’ll likely have to apply with a specialist lender. If you have a very good story backed up with evidence then you may be able to borrow 80% of the property value with one of our banks.

  • Dominic

    I will send in my details to your email and hopefully we can work it out with a major lender. Thank you.

  • schardt

    I only had a single default of under $600 and it’s been paid already. Can I get a home loan despite this and also the fact that I may not be able provide full financials?

  • Hey schardt,

    Yes, you can get a low doc loan, however, the qualifying criteria can be a little complicated as the specialist lenders have very different lending guidelines for low doc loans. Please call us on 1300 889 743 to discuss this with one of our low doc specialists.

  • Shin

    Do you have real bad credit specialists? Where can I check out their info?

  • We do have mortgage brokers who specialise in dealing with clients that have a bad credit history. We specialise in dealing with clients that don’t qualify if they go directly to the bank so if you’d like to know about our group of experts, you can check out the pages on the ‘Our Team’ section on our website:

  • DD

    I’m looking for preapproval for a 80% LVR purchase. I have $75k in savings with ING and the only default I have lodged in my credit file is a $250 default with AGL that I paid off last year.

  • Hi DD,

    Most lenders should be able to help you with this. However, if you’d like some help in getting the most competitive deals and offers then please contact one of our default home loan specialists by calling 1300 889 743.

  • Vishnu Merhan

    I have an unpaid credit default of $9,000 along with a court judgement against it. Both appear on my credit file with deletion dates of mid-2018.

    Question 1: will a default be deleted from my file at the 5-year deletion date even if the outstanding amount remains unpaid?

    Question 2; is there any significance to there being an original and a current listing for the default?

    Thanks, Vishnu

  • Hi Vishnu,

    This is how long things stay on your credit file

    2 years:
    – Repayment history for your current debts (i.e. are the payments on time)

    5 years:
    – Credit enquiries
    – Defaults (paid and unpaid)
    – Writs & summons
    – Judgments
    – Bankruptcy (5 years from when listed or 2 years from when discharged, whichever is later)

    7 years:
    – Defaults listed as a serious credit infringement (where they can’t find you)

    Yes your default should be removed next year even if it is not paid. However in some circumstances we’ve seen credit providers relist the default for another 5 years. We’re not sure if they’re allowed to do that or not but they seem to do it.

    Yes the listing being current or paid is better than it being unpaid. That being said most banks will not approve your loan regardless because of the size of the default and that there is a judgement as well. It will improve the rate that you would get from a specialist lender though.

  • Vishnu Merhan

    They re-list for 5 years? That’s harsh! Win your experience, which credit providers have done that?

  • I’d prefer not to mention which companies as I don’t want to get legal threats mailed to us. However it is rare that companies do this.

  • KrD

    I’m a doctor with a paid default recorded on my credit file. It won’t be out from my file until a few years and I can’t wait until then to get a home loan. I have $30k savings and I own an investment property in NSW with my wife. But my wife also has ATO debt. Will we be able to secure a home loan despite our situation?

  • Hey KrD
    A few lenders may be able to accept this but you may have to leave your wife out of the loan. It’s likely that you won’t be able to qualify for a high LVR home loan so you’ll need to have a sufficient deposit. However, there’s also the option of using equity on your existing investment property so this shouldn’t be a big problem. Please discuss your situation and loan needs in detail with one of our mortgage specialists by calling 1300 889 743.

  • PTO

    I have $8000 worth of settled defaults that I settled 12 months ago and by the time I’m looking to purchase my land will have about $50k-$60k in savings will I still be able to to get a home loan through a specialist lender?

  • Hi PTO,
    Yes it’s likely we can assist you with this. We have a couple of specialist lenders that can accept vacant land and construction. Having the defaults over 12 months old also assists.
    When you’re ready just enquire using this link and you’ll be put through to a specialist bad credit mortgage broker.

  • PTO

    Is there a time frame that you have to build when getting a vacant land loan? Would just prefer to pay off the land for a year or 2 as much as possible so we can borrow less when it comes to the building part!

  • They say you’re supposed to build within a year or two years but I’ve never seen them enforce this. So your plan should be fine.

  • Jacqui Jones

    I have no defaults but have been pretty slack with paying bills on time (a number of late payments none in the past 30 days). My parents are going to go guarantor for the 20% deposit. I earn $130k a year and plan on consolidating my debt into my loan therefore it would be the only payment I would have to make. What will my chances be with getting a loan with a big bank?

  • Hi Jacqui,
    We’d need to look at your situation in full to be sure as this is complex. We can help with debt consolidation with a guarantor loan and we can help where bills are paid late but the combination of the two is something unusual we’d need to assess.
    The major banks don’t do debt consolidation with guarantor loans so you won’t qualify with them. The good news is that some 2nd tier banks do accept this type of loan and they are cheaper than the banks anyway.
    I hope that helps.

  • Joel Yao

    Hi, i am trying to get home loan refinance to buy franchise and be self employed. I am currently employed full time and my partner as well. Problem is, we got default rating from council but paying the arrears weekly as agreement. We want to borrow more funds for franchise and pay off our car loan. Is this possible?

  • Hi Joel,
    This may or may not be possible just depending on the circumstances. I’ll email you and cc one of our specialist mortgage brokers who will assist you further.

  • Lovely

    I’ve had late payments for a couple of months in my mortgage but haven’t missed any of them. So I did catch up and eventually paid these late repayments. I was planning to refinance and get some cash out, is this possible?

  • Hi Lovely, a couple of late payments is permitted with some lenders but several late payments will be viewed as a potential issue and assessed in a similar way to that of having missed a few payments. Please feel free to contact us on 1300 889 743 if you’d like some help to finding a lender that can be more flexible with your situation.

  • Cameron Redmond

    Hello, I have recently found out that I have 2 defaults, one for 243 the other 866 from pay day lenders two years ago when I was a chronic gambler and had a drug addiction. I have paid these defaults and have requested they be marked as paid. I have been told by homebuyers that I can’t be serviced for 2 years. I can’t wait 2 years as my budget was dead on this time, in 2 years houses will increase and it will forever be out of my reach. What can I do? I’ve been told to go to the ombudsmen and request they get removed or contact the pay day lenders to remove them. I have been clean 2 years now and this is haunting me . Any advice would be great I’m asking around everywhere

  • Ashika

    I’m thinking about buying a house. I have a low credit score (234) as I’ve made heaps of enquiries and I have a couple defaults on two credit cards that I’m paying currently. Can you guys tell me whether getting a home loan is possible in my current situation?

  • Hi Ashika,
    It looks like this is not the right time to apply for a mortgage. You may want to hold on for a while and try to pay off your defaults (it’s great that you’re doing this and moving in the right direction) and not apply for anything with any financial institution to keep your level of enquiries stable. More than two enquiries over a period of 6 months is not a good sign to most lenders. Also, if you have too many credit cards then it’s good to close some to improve your borrowing power, which will help you to improve your credit score. There are some specialist lenders who may be able to help you if the defaults are of small amount, and it’ll be really easy to apply for a home loan once you pay off your defaults.

  • JS


    I have 2 defaults adding up to $1800. One was paid and one was settled but both over a year ago. I currently do not have any debt and in the middle of saving for a deposit and have not made any credit applications for 3 years. So 2 questions:
    – Would I qualify for a home loan
    – What would be the the deposit I would need my situation if I was to take out a home loan for $450 000.00

    Thanks for your time.

  • Hi JS,
    Which state are you planning to buy in? And are you a first home buyer?
    You can qualify for a loan for 95% of the property value however you need to have a strong income to qualify. They like to see that you can easily afford the debt rather than you borrowing the maximum that you can afford.

  • Wystan

    Hi HLE,

    I am saving up for a deposit for a home loan- looking to buy end of 2019. I just ordered my credit file and notice that I have a credit default listed from November 2016 of $296, although it was from a 2011 electricity bill that I missed (must’ve just moved out without providing an address, was 18 at the time). I will of course pay it off asap. I’m wondering if I have a chance at all with a prime lender (hoping particularly for CUA or ING)?

    Other info:
    – My partner and I are looking at a joint loan, she has very good credit history. Apart from the default, I have not other debts or enquiries. My partner only has a post-paid phone bill account.
    – Looking at an established house (in Townsville) valued between 450 and 550k
    – First home buyers in Qld
    – Conservatively estimated deposit of about 60k all genuine savings (realistically can be $80k, max about $100k). Deposit has been saved through FHSSS and in a high interest savings account.
    – Both employed in government in permanent full-time positions with combined income of $150k p.a for 2 and 3 years respectively. Prior to this we were both uni students.
    – No debts or kids or major assets
    – Renting in the same premises for past 3 years with outstanding rental repayment history. Prior to this we were renting a private room at the same address for about 5 years.

    If I can’t get a loan with a prime lender, should we just push back our goal to buy until we have more deposit or wait completely until the default is off my account? I’d like my own home sooner but prefer paying rent to excessive interest rates!

    Thanks for your time.

  • Hi Wystan,
    Your default is of non-financial nature and is of a small amount, so there are high chances that prime lenders will accept your application (once the default has been paid) given your sound employment, savings and financial condition.

    Moreover, ING doesn’t accept people with a bad credit history unfortunately, but CUA might accept you. Don’t worry; we have a panel of almost 40 lenders, so we can help you find a prime lender despite your credit history.

    Call us on 1300 889 743 or enquire online and find out which major lenders can accept your application.

  • Hi James,
    Major banks may have an issue with defaults at 5% of deposit, or any loans higher than 90% of the property value. Now, with 20% deposit you have a higher chance, but still, the choice of the bank may matter. We know policies of almost every 40 banks on our panel, call us on 1300 889 743 or enquire online and speak with an experienced mortgage broker.

  • john

    Hi,I am looking to buy a property. was defaulted 10 years ago. Defaults are removed 3 years ago from my credit file and 2 years ago I got a personal loan, credit card and car finance again. I have recently cleared off current loan, credit card and car finance. Basically no debts now. Can i get a home loan now. do I need to disclose 10 years old defaults as well.

  • Hi John,
    Usually, defaults stay on your credit file for 5 years and even if you disclose, it won’t have any bearing against your home loan. It’s good to disclose but it isn’t mandatory to do so. Call us on 1300 889 743 or complete our free assessment form and one of our specialist mortgage brokers will call you to discuss your options.

  • john

    Thanks for your prompt reply. Currently my credit history is clean without any defaults and my credit score is Excellent.

  • Good to hear that John.

  • Evan

    Hi, my partner and I are planning to buy a house soon hopefully with my parents going guarantor. We have started to save and have a modest amount saved so far. The issue is my partner has 2 defaults on her file. She has arrangements in place and is paying them off. But would it be better to just use what we have saved and settle them as we have enough to pay them out and they’ll probably settle for less.

    From reading your article it seems she has 2 $1k+ defaults which isn’t great however if we settle and pay them, does having a guarantor change anything?

    My credit is good with no defaults/late payments etc.


  • Hi Evan,
    Although it’s not a big default, lenders will see it as a negative aspect on your partner’s credit file. Firstly, you have to clear those defaults and only then you can apply for a home loan. You can avoid the hassle if you apply on your own or if you both have to apply together, then you may have to provide an explanation to the bank that it was a one-off event and won’t be repeated again in the future. Even having a guarantor won’t necessarily change anything as this is more related with an applicant’s credit record. Call us on 1300 889 743 and speak with a bad credit specialist about your situation.

  • Lorenzo

    Hi, I’m looking to purchase a home.
    I have a default, should I pay it out in full or negotiate a settlement offer? Which one is looked at more favourably from the lenders perspective?

  • Hi Lorenzo,

    It is almost always better to pay off your debt in full when possible. Settling a default is typically viewed more favourably than not paying at all. The settled status will remain on your credit file for seven years from the original delinquency date of the debt.

  • Nettie

    Hi, I had a couple of minor defaults in 2016 listed unbeknownst to me while I was backpacking through Europe. One was a phone bill and a minor credit card debt of $500 which were both paid out as soon I was back in Australia. I’m looking to purchase my first house using my parents as guarantors. I applied with a couple of lenders and I keep getting knocked back due to my bad credit history. Can you guys help?

  • Hi Nettie,
    Typically, bad credit guarantor loans are not acceptable to lenders. However, we’ve helped several borrowers with bad credit get approved for a guarantor home loan. We’ll work with you to remove the defaults where possible and then present a strong case as to the reason for the default. Some of our lenders can consider defaults under $1,000 under their standard lending policy. Your application may also be considered on a case by case basis. Please fill in our online assessment form: so you can discuss your situation with one of our specialist mortgage brokers.