Getting A Home Loan After Part 9 Debt Agreement

Getting a home loan after a Part 9 (Part IX) Debt Agreement is possible, but only once the agreement is fully completed. While most major banks are likely to decline your application due to the agreement’s impact on your credit report, some specialist lenders may consider you based on your financial recovery.

A Part IX (9) Debt Agreement is a legally binding arrangement under the Bankruptcy Act 1966, designed to help individuals handle unmanageable debt without declaring full bankruptcy. While it offers financial relief, it also affects your credit history, which can make getting a home loan more challenging.

However, with stable income, consistent savings, and a clear record of financial recovery, home loan approval is still achievable through the right lender.

Life After A Part 9 Debt Agreement

Life after a Part 9 Debt Agreement is all about rebuilding your financial position and preparing for future opportunities, including applying for a home loan. Although the agreement stays on your credit file for up to five years, many people use this time to reset their financial habits and regain lender confidence.

Here’s what to focus on after your Part 9 is complete:

• Build a consistent repayment history: Pay all rent, bills, and any remaining debts on time.
• Avoid new credit applications: Only apply when necessary, as each enquiry affects your credit score.
• Save regularly: Lenders look for genuine savings over 3–6 months as proof of discipline.
• Maintain stable income: Employment stability (ideally 6–12 months with the same employer) is essential.
• Check your credit report: Ensure the Part 9 is marked as completed and there are no reporting errors.

With time and discipline, many people qualify for home loans within 12-24 months after completing their Part 9 agreement, especially through non-bank lenders.

Can You Get A Home Loan While In A Part IX Debt Agreement?

Generally, no. Lenders will not approve a home loan while your Part IX Debt Agreement is still active. You must wait until the agreement is fully discharged before applying.

Exception: If you already have a mortgage, some specialist lenders may allow you to refinance your loan to pay out the debt agreement, if you’ve made consistent repayments.

How Soon Can You Apply For A Home Loan After A Part IX Debt Agreement?

You don’t necessarily have to wait five years for the agreement to clear off your credit file to apply for a home loan. Your eligibility depends on how long it has been since your discharge:

• Immediately after discharge: Some specialist lenders may consider your application one day after discharge.
• 12 months after discharge: More lenders become available if you demonstrate a strong repayment history.
• Two years after discharge: More competitive loan options with lower interest rates may become available.

What Are Your Home Loan Options After A Part IX Debt Agreement?

Your options depend on how long it has been since you exited the agreement. Here’s what you need to know:

• Refinancing to Pay Off the Debt Agreement: Some specialist lenders can help refinance your current mortgage to pay out your Part IX agreement, if you’ve made consistent repayments.
• Specialist Lenders for Recent Discharges: If you’ve been discharged within the last 12 months, some non-conforming lenders may approve your application, though at higher interest rates.
• Mainstream Lenders After Two Years: If you’ve been discharged for two years or more and have a strong repayment history, major lenders may consider your application at standard interest rates.

Tips To Improve Your Home Loan Application After A Part IX Debt Agreement

• Show Employment Stability: Lenders prefer stable employment (12-plus months), consistent income (2-plus years for self-employed), and permanent positions over casual/contract work for better loan approval chances.
• Save A Larger Deposit: Aiming for at least 20% will improve your chances of approval and reduce the need for Lenders Mortgage Insurance (LMI).
• Demonstrate A Solid Repayment History: Show consistent payments on rent, existing loans, or bills.
• Reduce Existing Debt: Before applying, minimise personal loans, credit-card balances, and other financial commitments. Review your buy-now, pay-later services, like Afterpay and Zip Pay.
• Choose the Right Lender: Not all lenders assess Part IX applicants the same way. Working with a mortgage broker can help identify suitable options.
• Consider A Guarantor Loan: Your chances of approval may improve if a family member is willing to act as a guarantor.

If possible, wait until the five-year mark, when the Part IX Debt Agreement may be removed from your credit file. This improves your home loan eligibility and interest rates.