How much can I borrow with a default?

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Shelly
Posts: 3
Joined: Fri May 17, 2019 3:00 pm

How much can I borrow with a default?

Postby Shelly » Fri May 17, 2019 3:02 pm

Hi, I was very surprised when we were knocked back for a home loan. I’ve always paid my bills on time and in full or so I thought, that is until I found an unpaid $400 Vodafone bill listed as a default that had stayed on my file for more than a year. My credit score is sitting at a less than ideal score of 490. I didn’t dispute it at the time and immediately paid it off. They’ve refused to remove the default. Even though we had saved up for a house, we had to let go of a property that we were really interested in. How much can we borrow with a default? Another great property just came up and we were hoping if there were any options for us with bad credit? We’ve heard of bad credit loans.

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Otto Dargan
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Re: How much can I borrow with a default?

Postby Otto Dargan » Fri May 17, 2019 3:49 pm

Hello Shelly. Welcome to the forums.

You can get approved for a home loan even if you have defaults on your credit file. The type of default, amount, and how old they are, are all taken into account. Generally speaking, paid defaults are looked at more favourably than unpaid defaults.
  • 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.
It is imperative that you avoid applying with unsuitable lenders and being knocked back due to your bad credit history and adding more unnecessary credit enquiries to your credit file.

We specialise in bad credit home loans.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a bad credit mortgage.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Shelly
Posts: 3
Joined: Fri May 17, 2019 3:00 pm

Re: How much can I borrow with a default?

Postby Shelly » Fri May 17, 2019 4:14 pm

That sounds wonderful. So, how do I qualify for a bad credit mortgage with one of your banks?

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Otto Dargan
Mortgage Specialist
Posts: 7641
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How much can I borrow with a default?

Postby Otto Dargan » Fri May 17, 2019 5:45 pm

Hi Shelly,

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

  • You must have less than $500 in defaults if you’re borrowing up to 95%.
  • You must have less than $1,000 in defaults if you’re borrowing up to 90%.
  • You must have a reasonable explanation for the adverse listing.
  • No more than 2 defaults in total for 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 a minimum of 5% in genuine savings.
  • No other policy exceptions are allowed.

Just to be clear, if you don’t meet the criteria listed above you can still qualify with one if our specialist or non-conforming lenders from our panel of almost 40 lenders.
Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Shelly
Posts: 3
Joined: Fri May 17, 2019 3:00 pm

Re: How much can I borrow with a default?

Postby Shelly » Mon May 20, 2019 2:12 pm

My default was paid back about 4 months ago and we’re planning to save up around 50k during this time period. How do we make sure we have the best chance at approval when the time comes?

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Otto Dargan
Mortgage Specialist
Posts: 7641
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How much can I borrow with a default?

Postby Otto Dargan » Mon May 20, 2019 2:49 pm

Hi Shelly,

To improve your chances at 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 as large of a deposit as you can, the minimum required is 5% of the purchase price.
  • 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.

You can use our credit score calculator to identify any issues with your mortgage application. It uses a system similar to what banks and Lenders Mortgage Insurer when assessing loans.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan with bad credit.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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