Can I get a home loan even with bad credit?

Any general questions you might have in regards to loans and finance.
Becky
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Joined: Tue Jul 23, 2019 7:14 pm

Can I get a home loan even with bad credit?

Postby Becky » Tue Jul 23, 2019 7:18 pm

I had difficulty getting a car loan two years ago because of some missing documents. Also, have some outstanding utility bills that I had to pay. While applying for some home loans with some lenders, I got declined, which led to a blemish on my credit file.

I need help getting a home loan now, as I have finally secured a permanent job as a nurse in Brisbane. I’m excited about staying in my first home! Can I get a home loan even with bad credit?

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Otto Dargan
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Re: Can I get a home loan even with bad credit?

Postby Otto Dargan » Tue Jul 23, 2019 7:41 pm

Hello Becky,

Welcome to the forums.

Yes, you can qualify for a home loan even with bad credit. Some of our specialist lenders could get loan approvals for you even when you have some defaults on your credit history. The lenders will look into your credit file and Equifax score to calculate your credit score.

To qualify for a bad credit home loan, you need to:

  • Provide a default explanation letter.
  • Provide evidence to explain the causes of your defaults.
  • The amount of deposit required depends on your credit issues. Lenders usually look for 5% to 20% of the property value as a deposit.
  • If possible, repay any unpaid defaults and get your credit provider to mark them as paid before you apply for the loan.
  • Make sure you avoid getting more negative listings when applying for the loan.
  • If you have unused credit cards, make sure to cancel them so that it improves your borrowing capacity.

As this is the first home you are buying, you could even be eligible for the First Home Owners Grant (FHOG).

Our specialist mortgage brokers are here to help! Call us on 1300 889 743 or complete our online enquiry form for a free assessment.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Becky
Posts: 3
Joined: Tue Jul 23, 2019 7:14 pm

Re: Can I get a home loan even with bad credit?

Postby Becky » Tue Jul 23, 2019 7:50 pm

I think I do qualify for FHOG since this is my first time buying a home. However, even with bad credit, am I eligible for it?

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Otto Dargan
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Location: Sydney, Australia
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Re: Can I get a home loan even with bad credit?

Postby Otto Dargan » Tue Jul 23, 2019 7:56 pm

Yes, you are eligible for the First Home Owners Grant (FHOG) even with a bad credit score. This grant is for people buying their first home.

You must meet the following criteria.

  • The applicant is a natural person i.e. is not a company or trust.
  • At least one applicant is a Permanent Resident (PR) or Australian citizen (NZ Citizens have automatic PR under Special Category Visa 444).
  • Each applicant must be at least 18 years of age.
  • All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with some other person, in any State or Territory of Australia before 1 July 2000.
  • All applicants and/or their spouse/de facto have not owned on or after 1 July 2000 a residential property and occupied that property jointly, separately or with some other person in any State or Territory of Australia for a continuous period of at least six months.
  • Each applicant has entered into a contract for the purchase of a home or signed a contract to build a home on or after 1 July 2000. In the case of an owner-builder, laying of the foundations commenced on or after 1 July 2000.
  • The total value of the property does not exceed the cap amount (Cap amount varies between states).
  • This is the first time an applicant and/or their spouse/de facto will receive a grant under the First Home Owner Grant Act 2000 in any State or Territory (unless subsequently repaid).
  • At least one applicant will occupy the home as their principal place of residence for a continuous period of at least six months, commencing within 12 months of settlement or construction of the home.

Please contact your state government to confirm the criteria for your state as it may differ. In particular, the cap on the value of your property does vary between states and in some states, there is no cap.

Note that other first home benefits such as additional grants or stamp duty exemptions are offered by the state government and so they may have different eligibility criteria.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Becky
Posts: 3
Joined: Tue Jul 23, 2019 7:14 pm

Re: Can I get a home loan even with bad credit?

Postby Becky » Tue Jul 23, 2019 8:02 pm

Thanks for helping me. I am hopeful to get a loan to help me out straight away. Is there a limit on how much I can borrow?

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Otto Dargan
Mortgage Specialist
Posts: 7600
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can I get a home loan even with bad credit?

Postby Otto Dargan » Tue Jul 23, 2019 8:21 pm

Lenders will look into your paid and unpaid default amounts to find out how much you can borrow:

  • If your default amount is less than $500, then you can borrow up to 95% of property value. Please note that lenders will use credit scoring to assess loans at 95% LVR.
  • If your default amount is more than $1000 then you can borrow up to 90% of property value. If there are unpaid defaults or larger paid defaults, then you can borrow up to 90% (However, this is only applicable with a specialist lender).
If you’re borrowing less than 80% of the property value, you do not need to pay Lenders Mortgage Insurance (LMI) and you could even get a cheaper interest rate, even with bad credit, depending on which lenders you qualify with.

You can make use of our borrowing power calculator to get an estimate of how much you can get from banks or specialist lenders.

Our specialist bad credit mortgage brokers are here to help! Call us on 1300 889 743 or complete our online enquiry form for a free assessment.

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


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