Have you ever been late with an electricity, mobile or credit card bill?

There’s plenty of people who have and it’s not usually a big problem unless the debt is for more than $150 and you’re more than 60 days late in paying it. At this point, you’ll have a default lodged on your credit file by the credit provider and the default may stop you from buying your dream home.

Luckily, you may still qualify for a home loan if you choose the right lender.

Can I get a home loan even if I have several defaults?

Do you have more than one default on your credit file? Your ability to borrow depends on the type of default you have, how old they are and their combined value.

In spite of this, some lenders will still accept your home loan application if you have:

• Less than $500 in paid defaults – You may be able to borrow up to 95% of the property value.
• Less than $1,000 in paid defaults – You may be able to borrow up to 90% of the property value.

If you have any unpaid defaults or larger paid defaults, you may still qualify with a specialist lender and borrow up to 90% of the property value.

What if I have a large default?

The size of your default has a massive influence on your eligibility for a home loan. The bigger the default, the more likely your application will be declined.

Fortunately, there are specialist lenders out there that will lend to you although it will be at a reduced Loan to Value Ratio (LVR), which is effectively the percentage of how much the bank will lend to you in relation to the value of property.

Is your credit file:

• Not quite perfect? – If you have defaults for less than $1,000 and you’ve paid it more than six months ago, you may be able to borrow up to 80% of the property value with a prime lender or a major bank. Depending on your situation, you may even be eligible to borrow over 80% of the property value.
• A little messy? – If you have paid defaults of more than $1,000, a specialist lender may be able to help you. You may be able to borrow up to 80% of the property value if you have good reasons for the defaults backed up with strong evidence. A specialist mortgage broker can help you do this because they’re experts in presenting a strong case for Australians with bad credit.
• Seriously impaired? – If you have more than $5,000 in defaults and only some of them have been paid then it’s probably best using a private, specialist or non-conforming lender.

Can my defaults be removed?

This is a very common question among defaulters and the good news is that, yes, you can have them removed. The problem is that it can be a long and complicated process.

If you want to go down this path and clean up your credit file, it’s best to speak to a qualified credit advisor who can give you specific advice on repairing your credit file.

Our mortgage brokers have strong relationships with more than 40 Australian lenders and can match you with one that will take a common sense approach to your situation.

Call one of our bad credit specialists on 1300 889 743 or enquire online to find out how we can help you.