Do I get a home loan with a bad credit record?

Any general questions you might have in regards to loans and finance.
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absalom
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Joined: Tue Apr 05, 2016 5:12 am

Do I get a home loan with a bad credit record?

Post by absalom »

Hi, I am a mother of two from Woomera and my husband has a carpentry business of his own and some personal loans for it. The business took a hit and we missed out on the mortgage payments, and ultimately the bank issued a letter to us. It’s been all sorted now.

Can we refinance the home or will the previous missed mortgage payments count against us and how much will we be able to borrow for the home loan? Can someone at this forum help me out?

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Otto Dargan
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Re: Do I get a home loan with a bad credit record?

Post by Otto Dargan »

Hello absalom.

Missing mortgage repayments, which includes missed, late or overdue payments, is considered very severe by the lenders and they can repossess your house and sell it to recover their money.

It is very tough to get refinance from the major lenders, however, there are some specialist lenders that may help people refinance their current mortgage with bad credit.

They will assess your loan based on the time to make up your missed payments and other commitments, however, the amount you can borrow and the lender you apply with will depend on your situation. You may be able to borrow up to:
  • 80% with a major lender or even 90% with a specialist or a non-conforming lender with minor late payments.
  • 80% with a specialist lender with up to two missed payments.
Cheers,
Otto
Otto Dargan
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P | 1300 889 743
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absalom
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Joined: Tue Apr 05, 2016 5:12 am

Re: Do I get a home loan with a bad credit record?

Post by absalom »

Thanks for that. We want to refinance the current mortgage and if possible borrow some extra funds to pay out some personal loans of my husband as well. Is this possible and what are the costs associated with it?

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Otto Dargan
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Re: Do I get a home loan with a bad credit record?

Post by Otto Dargan »

Hi absalom,

You can refinance the current mortgage and have your debts consolidated as well if have significant equity in your property. Else, you may be required to pay Lenders Mortgage Insurance (LMI), a once off fee if you're borrowing above 80% of the property value.

If the debts that you are consolidating have a fixed interest rate then you have to pay break fees. Also, the set up fees for the new home loan are typically under $500 with the specialist lenders.

Please note that the specialist lenders have higher interest rates than normal bank loans, so it is only a short term solution. Once you meet the standard criteria, you should again refinance it to major lender to save in interest expenses.

You can go through our website for more information regarding bad credit home loans as well as refinancing. You can also call us 1300 889 743 to discuss your current situation. Our free assessment form may also help you see if you qualify for a loan or not.

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

absalom
Posts: 5
Joined: Tue Apr 05, 2016 5:12 am

Re: Do I get a home loan with a bad credit record?

Post by absalom »

Thanks a lot, your answer and website is very helpful. I will discuss further with my husband and speak with you guys soon.

Brandon Fisher
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Joined: Tue Jun 28, 2016 3:36 pm

Re: Do I get a home loan with a bad credit record?

Post by Brandon Fisher »

I was planning to buy a house but I’m not sure whether my loan application will be accepted or not. A personal crisis led me to a few defaults on my current debts. Can I get a home loan despite my bad credit history?

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Otto Dargan
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Re: Do I get a home loan with a bad credit record?

Post by Otto Dargan »

Hi Brandon Fisher,

Bad credit home loans are available and suitable for people with a bad credit history. However, traditional lenders like major banks may not consider a home loan application even if there is a good reason behind the bad credit history. Lenders take the type of defaults that you have into consideration while assessing how much you may be allowed to borrow.

Generally, if you have:
  • Less than $500 in paid defaults then you may be able to borrow up to 95% Loan to Value ratio (LVR).
  • Less than $1,000 in paid defaults then you may be able to borrow up to 90% LVR.
  • Any unpaid defaults or larger paid defaults then a specialist lender may allow you to borrow up to 90% LVR.
You may also have to meet certain conditions to qualify such as:
  • You must have at least 5% genuine savings if you are purchasing a property.
  • Your impaired credit history must be supported by a very good reason.
  • You must not have more than two defaults in total for one loan application.
Also, you could have your credit repair to improve your credit rating. It refers to the process of improving one’s credit score by the removal of disputable, unfair, or other such listings from the credit report.

You can get more details regarding this at our website.

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

Brandon Fisher
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Joined: Tue Jun 28, 2016 3:36 pm

Re: Do I get a home loan with a bad credit record?

Post by Brandon Fisher »

Your site is very helpful and I will research more before I speak with you guys. Thanks.

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