Getting a home loan after divorce

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: Getting a home loan after divorce

Post by Otto Dargan »

Hi and welcome to the forums Captain Cook.

Divorces happen all the time in Australia. In fact, 1 in every 3 married couples get separated every year in Australia, and this directly or indirectly leads to bad credit for many.

Most people understand this, however, banks don’t. They will avoid borrowers who have black marks on their credit file because they believe that such borrowers are more likely to miss their repayments again.

This is why lenders have a list of qualifying criteria for bad credit home loans:
  • Small paid default: You may be able to borrow up to 90% and in some cases 95% LVR (of the property value) if you have a small default for less than $500 and it has been paid more than six months ago.
  • More than one small paid default: You may be able to borrow up to 85% or possibly 90% of the property value if you have less than $1,000 in paid defaults from financial institutions (e.g. banks), and less than $500 in paid defaults from non-financial institutions (e.g. phone companies).
  • Moderate paid defaults: You may be able to borrow up to 80% of the property value with a prime lender, up to 90% of the property value with a specialist lender if you have up to $3,000 in paid defaults. You may be able to borrow up to 100% of the property value if you have a security guarantee from your parents.
  • Large paid defaults: Larger paid defaults from $3,000 to $500,000 may be considered on a case by case basis if you have a very good explanation which is backed up with strong evidence. You may be able to borrow up to 90% with a specialist lender.
  • Unpaid defaults: If you have any unpaid defaults then you may be able to borrow only up to 90% of the property value with a non-conforming lender. Many lenders require you to pay the defaults before the loan is approved.
  • Judgments or court writs: You may be able to borrow 90% of the property value with a non-conforming lender if you have any judgments or court writs.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Getting a home loan after divorce

Post by Otto Dargan »

Hi Captain Cook,

If you’re discharged bankrupt, then we can help you borrow up to 90% of the purchase price of a property. You’ll need 14% to 16% of the purchase price to cover your deposit, stamp duty and Lenders Mortgage Insurance (LMI).

We can even help you get substantial discounts on standard interest rate, if:
  • Your loan is for no more than 80% of the property value.
  • You can provide evidence that you now pay your bills on time, e.g. a rental history.
  • You can provide evidence that the bankruptcy was a one-off event that wasn’t your fault.
  • You’ve been discharged for a particular period of time, e.g. one year.
However, if you’re not discharged from your bankruptcy status, then we can’t assist you with a home loan.

If you would like to know more about bankruptcy home loan, then you can check out our website. If you’ve already been discharged from bankruptcy, then give us a call on 1300 889 743 or fill in our free assessment form and one of our mortgage brokers can let you know what your options are.

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

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Getting a home loan after divorce

Post by Otto Dargan »

Hi Koori,

Bad credit information stays on your credit file for a set period of time from the date it was lodged:
  • Current debt repayment history – 2 years
  • Court writs and summons – 5 years
  • Enquiries – 5 years
  • Defaults – 5 years
  • Court judgments – 5 years
  • Defaults (Clearout) – 5 years
  • Part IX – 5 years
  • Bankruptcy – Up to 7 years. 5 years from the day you become bankrupt and 2 years starting from the day the bankruptcy ends.
Keep in mind that paying a default does not remove it from your credit file, it just updates your file to show that the default was paid.

You can only have a default removed with the consent of the company that lodged the default on your file in the first place.

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

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