FAQ’s on Home Loans for Bad Credit.
Find answers to the most commonly asked questions on home loans for bad credit here!
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Australia has three major credit reporting agencies: Equifax, Dun & Bradstreet (D&B) and Experian. Websites offering credit reports will have to apply for your report through one of these three agencies. It usually takes up to 10 working days to get a report back. These services are free – so be wary of sites “selling” that information to you! You will need personal info such as your drivers licence and previous addresses to verify your identity. This way you can find errors on your history and start correcting them.
We can arrange for a copy of your credit file as part of our pre-assessment process with your permission.
Your credit report includes information pertaining to when you made the application, what type of credit you applied for, how much you requested, as well as other information regarding your repayments. For example, if you have ever filed for bankruptcy or have defaulted on a loan or had a court judgement against you, this information, including pertinent details, will be found in your credit history file.
The industry refers to bad credit home loans as non-conforming loans. They are sometimes called “sub-prime” loans, although not all bad credit home loans are sub-prime products.
As these lenders take on bigger risks, they ask for more interest. If you can demonstrate good banking habits, low debt, and/or stable employment and Credit Impairment is longer than 2 years this will go a long way in reducing the interest rates on offer. if your bad credit was triggered by a life event such as loss of job, injury, business failure, sickness or divorce then lenders tend to be more understanding.
As a general rule, bad credit home loans are priced based on the following parameters:
- The age of credit history defaults listed on the applicants credit report (the older the better).
- Whether or not the defaults and judgments are paid, settled or unpaid at the time of application (paid or settled is far better than unpaid).
- The nature and type of the credit defaults or judgments (such as a telco, utility or financial institution default). Generally, telco and utility-related defaults are less severe than financial default listings.
- What LVR the bad credit home loan applicant is seeking (the lower the loan to value ratio, the lower the risk to the lender, therefore qualifying the lender for a lower interest rate)
Your credit report will show all credit-related enquiries in the last five years. All defaults and judgments generally remain on your credit file, irrespective of whether or not they are paid, for a period of five years from the date they are listed.
Many of our bad credit home loans will still have extras such as offset accounts, redraw facilities and other facilities depending on the funder.
No. Once your credit file is clean and if your account is in good standing, we can refinance your loan at a lower, or even “prime” rate.
Yes. You can also apply for any first time buyer grants, if available in your state.
This means that the data collected in your application is given a rating or score and if the computer scores you as a bad risk, the application is declined before a real person has a chance to look at the application or hear your story as to why you have had credit problems in the past. In other words, ‘computer says no’.
We specialise in helping people with unpaid defaults on their credit file obtain a loan to consolidate their debts and negotiate with their creditors. In fact helping people get back on track is the foundation of our business.
If you are planning to borrow as a joint buyer, this can affect your ability to access prime rates as the lender requires both applicants to have clean credit.
Yes. If your loan or credit facility is in arrears the lender or creditor will usually be highly motivated to bring a speedy resolution to the matter. It is our experience that keeping in touch with your creditors to work together through your period of difficulty is best practice. We can do this on your behalf to help you so contact us today
Yes. We can still help you and it may be possible to request a stay on this legal action for you and then attempt to facilitate a good settlement offer. It may also be advisable to seek Independent legal and financial advice.
The Australian Securities & Investments Commission (ASIC) provides information on how to obtain free legal advice for each state on the link below:
If you have sufficient income to service the new mortgage then this could be the most appropriate action, especially if your debt situation hasn’t gotten completely out of control. However, unless you are ready to make a commitment to avoid further debt, budgeting to change your spending habits and making extra repayments on your new mortgage, a debt consolidation mortgage is likely to get you further into debt.
Our fully qualified team of Finance professionals will tailor credit advice best suited to your personal financial situation.
Send your enquiry today.
We have mortgage brokers that specialise in Bad Credit Home Loans. Please complete our Express Enquiry Form or Phone Direct and you can discuss your situation with an expert.
If you wish to proceed, then we will help you to complete all the necessary paperwork and liaise with the lender on your behalf. This will include the completion and submission of your loan application and the on-going communication between all parties until your loan is settled.