Bad Credit Home Loans
Guide to Australian Bad Credit Home Loans
Ending up with bad credit can happen to the best of us as it is so easy to spend on credit cards without considering how you’re going to repay them, and once that interest adds up it can seem almost impossible to tackle that debt. Perhaps your bad credit stems from poor cash management and you are regularly unable to pay your bills on time and these have ended up on your credit report. Regardless of how you got there bad credit is something you just have to deal with because information will stay on your credit report for up to 5 years or more, but you don’t need to wait that long if you are interested in buying a home because bad credit home loans can make possible for just about anyone with a chequered credit past to buy their own home.
Non-conforming home loans are very flexible and can even accommodate people who have previously been declared bankrupt as well as those with a bad credit history whether you want to buy an established home or planning on building.
Fox Symes Fixed Rate Home Loan
Fox Symes Home Loans offers a range of competitive solutions. Take advantage of this fixed rate home loan offer where your interest rate will remain fixed and unchanged for a period of 3 years. Simply fill out a free home loan consultation online and you will be assisted in finding the best home loan and interest rate in the market.
- Interest Rate of 6.20%
- Comparison Rate of 6.40%
- Application Fee of $Varies
- Maximum LVR With LMI: 95%
- Minimum Borrowing: $0
- Maximum Borrowing: $2,000,000
How Bad Credit History Can Affect You
During your lifetime you will at some stage borrowed money for a credit card, a car, or many other things you have desired from time to time. You may even have purchased a home but for some reason, maybe a bad life choice, or it could have come about simply by circumstances out of your control, but whatever the reason, you became dispossessed of it. No matter the cause, it doesn’t matter, the fact is that it would have been recorded and become part of your credit history.
All your financial dealing are gathered together and linked to you because your credit history paper trail is what most lenders rely on before deciding whether to allow you to borrow from them or to reject your application outright.
Home loans for people with bad credit are available.
All is not lost however as credit impaired home loans are available if you can meet the following criteria:
- If you are not currently bankrupt or taking advantage of a part 9 creditor agreement within the Bankruptcy Act. ( You can however apply for a non-conforming home loan the day you receive your discharge from such restrictions).
- If you can put together a minimum deposit of 20 per cent (or have 20 per cent equity in the property you want to refinance). The maximum non-conforming home loan is 80 per cent of the property value but any First Home Owner Grant (FHOG) you may be eligible to receive can be included as part of your deposit.
- You will be required to find money to pay any stamp duty and other costs outside of the loan allocation funds.
- A guarantor, whether a parent or not, does not give relief from the necessity of you having to post the required 20 per cent deposit.
- Likewise, it does not matter if you have a large salary or not, you will still have to put up the 20 per cent deposit.
- You will need to prove you have sufficient ongoing income to service the loan repayments. (Usually people on pensions or those who are unemployed can not obtain a non-conforming home loan).
- Any outstanding debts whether in default or otherwise must be declared and be fully consolidated into your new mortgage and be fully paid out on settlement. (Even taking into account of the consolidation of all outstanding debts your new home loan can still not exceed 80 per cent of the property’s value.
How To Get A Home Loan If You Have Bad Credit
Getting a home loan if you have bad credit is all about being prepared and being honest. While you may feel like somewhat of a black sheep if you have marks on your credit report, a bad credit history is not as uncommon as you might think, and there are ways to overcome bad credit so you can achieve the dream of buying your own home. To help you avoid rejection of your home loan application, if you have bad credit:
- Find out for sure before you apply. You may have a lot of credit cards all you don’t always managed to pay your bills on time so you suspect that you have a bad credit history and before you worry for nothing about how you’re going to apply for a home loan with bad credit, obtained a copy of your credit report to find out exactly what you’re dealing with. Having a copy of your credit report before you meet with a bank or mortgage broker to apply for a home loan, can also help you uncover whether there have been any mistakes on your credit report which have led to you having bad credit, such as a bill being declared overdue when you have paid, or someone fraudulently using your credit card details. In these cases bad credit can often be fixed.
- Be honest if you have bad credit. If you are honest about the fact that you have a less than perfect credit history, your mortgage broker or lender can more easily find a way around the issue, rather than finding out too late that there is a better type of loan could be applying for to ensure success.
- Take control of your credit. If you are able to show responsibility and restraint when it comes to your credit card spending, this can go a long way to showing that you have reformed your ways from those which got you into credit trouble in the beginning. If you are considering applying for a new home loan, start a regular savings plan too as this also shows financial responsibility and stability.
Home Loan Features To Avoid If You Have Bad Credit
Applying for a home loan if you have bad credit is about more than just applying and hoping you are accepted. You also need to make sure that your home loan will help you manage your finances responsibly in the future, and not be tempted into making your bad credit history even worse. If you have a bad credit history consider avoiding features which may tempt you into spending more than you can afford, such as:
- A line of credit equity loan. A line of credit allows you to access the equity in your home up to a value decided on by your lender. Often you don’t need to make repayments until you have reached the limit of your line of credit, and while a line of credit has a lower interest rate than most credit cards or personal loans, it requires significant discipline to not spend more than you can afford to repay.
- A linked credit card. When you sign up for a new loan product many lenders will also want to throw in other financial products as well. A common addition to a home loan is a credit card as this is a good way to make the most of an offset account where you can leave your wages in an offset account to say the interest, whilst you use the interest-free days on your linked credit card. However if credit cards were your bad credit crux then you may want to avoid taking your lender up on the offer of a credit card, even if they are willing to waive annual fees.
- Redraw facilities. Making additional repayments to your home loan is one of the most financially responsible things you can do, so make sure you look for a home loan which allows you to make additional repayments without attracting a fee. At the same time having a redraw facility on your loan can make it very easy to access those funds again, underwent all of your hard work.
Bad credit home loans may require a little more documentation, and may charge you a slightly higher interest rate but always under its not impossible to get a home loan if you have indiscretions in your credit past.
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