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What do I need to know about bad credit home loans?
The first thing to know about bad credit home loans is that they exist. They can be a lifesaver for the home loan applicant that has the kind of credit file that may stop them getting loans with some of the big banks. At Mortgage House we won’t let a bad credit history be an automatic disqualifier, whether you are looking for a home loan or a personal loan. We understand that people can find themselves in all sorts of difficult financial circumstances, whether it’s because of a bad investment, problems with a tax return or just some bad decisions over their lives. Bad credit home loans exist to help. Here’s a few things to know about bad credit home loans:
- Applications can be complex. It’s important to understand that applying for bad credit mortgage or bad credit personal loans can involve a bit more than with a traditional loan. At Mortgage House we want to know as much about you and your financial history as we can, to help you find a suitable product. We will work closely with you to try to tailor one of our bad credit home loans to suit your needs.
- Deposits may be higher. Being a successful home loan applicant for any of our bad credit home loans may mean having to pay a higher deposit. Bad credit mortgages come with an increased level of risk for lenders, whether you are looking to buy a home to live in or an investment property. Some of this risk is managed with the requirement of a higher deposit.
- Bigger interest rates. A home loan applicant looking to choose from any of Mortgage House’s bad credit home loans may also be faced with a higher interest rate. Once again, this is a way some lenders can manage the risk of bad credit mortgages. One way to make it easier to choose from bad credit home loans is to look at the comparison rates advertised with them. All banks and lenders are required by law to advertise comparison rates alongside the regular interest rate figures. A comparison rate is a way to see how fees and charges with certain loans can impact the long-term cost of a loan.
At the end of the day, bad credit home loans can be a Godsend to a home loan applicant with a credit report they are not happy with. They can present you with a real opportunity to get back on your feet, get your finances back on track and buy your own home. Mortgage House’s borrowing calculator is a good first step to get an indication of what a lender may lend you. Fill in all the details below as accurately as you can, being sure your expenses include any credit repayments on personal loans or credit cards you are still making.
At the very least, the information you receive from our borrowing calculator will be a good place to start when talking to our lenders.
Important Disclaimer: This is intended as a guide only. Details of terms and conditions, interest rates, fees and charges are available upon application. Mortgage House's prevailing credit criteria apply. We recommend you seek independent legal and financial advice before proceeding with any loan. The Comparison Rate for each of the home loan products contained in this page is based on a loan of $150,000 over a 25 year term. Fees and charges may be payable.
WARNING: The comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. * This mortgage calculator shows indicative repayments based on 12/26/52 equal repayments for monthly/fortnightly/weekly options.
Can I qualify for a home loan with bad credit?
There are no hard and fast rules when it comes to qualifying for bad credit home loans. However, the first step can be to check your credit file to get a full picture of your credit report. Your credit file is held by a credit bureau company and is a detailed list of all your financial movements. It has a range of information about your financial history on it, such as whether you have applied for any personal loans, whether you have been declared bankrupt, how may credit cards you have and whether or not you have any outstanding debts or requests for debt collection.
It can also record whether you have missed any loan repayments, including home loans. All of this data on your credit report is ranked, and you are given a credit score. The higher credit score you have, the better access you get to good deals and, with bad credit home loans, the lower interest rates you are likely to be charged. It can also directly impact the amount you may be able to borrow, and any other payment terms. Mortgage House’s focus on tailoring a suitable home loan directly to your needs and financial situation means we will work hard to find ways to help you qualify for one of our bad credit home loans.
Another way to help you qualify for bad credit home loans is to consider Lenders Mortgage Insurance, or LMI. LMI is there to protect lenders against the default of loan applicants. It is not to protect those applying for a home loan, for which there are other options. But LMI can still be advantageous for you. LMI can increase your chances of being approved for any of our bad credit home loans and may even be able to help you get a better deal when it comes to loan amounts and interest rates. You can pay LMI in one lump sum up front or include it in the amount you want to borrow, allowing you to pay it off over the life of the loan. Stamp duty is another thing to consider when understanding how much you may want to borrow. Where you live and what kind of property you buy can influence how much stamp duty you pay. Our Stamp Duty Calculator below can help fill in any gaps you have.
How to get a home loan with bad credit?
The best thing to do if you are looking to be successful in applying for one of Mortgage House’s bad credit home loans is to try to improve your credit score. As mentioned above, a higher credit score can increase your chances of being successful when applying for a home loan, help with interest rates, and even help you be approved for a higher loan amount. Here are a few tips that can help anyone applying for bad credit home loans.
- Pay off your existing debts. If you have debts such as personal loans or credit cards, try to settle them as quickly as you can. These are examples of bad debts, which decrease in value quickly and will not add to your personal wealth. There are examples of good debt, which are investments that can increase over time such as houses, including an investment property, or sought-after collectibles. One popular way of making a big dent in any existing debts is to pay them down using any refunds you get from your tax returns. That is usually money most people generally don’t budget for and is tax free.
- Manage your credit cards. It is not just the amount you owe on your credit card that can be a hinderance to loan applicants. If your credit cards have a high limit, banks and lenders can look unfavourably on that. Also, prevent overdrawing your credit cards and don’t apply for any more.
- Pay your bills on time. This is one of the easiest ways to help improve your credit situation. Budget each week for bills such as gas, electricity and your phone, and make sure you know in advance when they are likely to be due. Set up regular weekly direct debits from your bank account to help limit the shock when the bills arrive in the mail.
- Budget. Budgeting is something that is not as difficult to do as it sounds, and it can be very effective. Use our Budgeting Calculator below to help you work out what you can change to save money and repay some of that bad debt.
Important Disclaimer: This information is intended as a guide only. The calculation of fortnightly and weekly instalments varies with the specific loan product. Higher loan repayments will be required on principal and interest loans where the instalment calculation is based on half the monthly payment for a fortnightly payment or a quarter of the monthly payment for a weekly payment. Details of terms and conditions, interest rates, fees and charges are available upon application. Mortgage House's prevailing credit criteria apply. We recommend you seek independent legal and financial advice before proceeding with any loan.
How to refinance a home loan with bad credit?
Giving your home loan a health check from time to time is always a good idea, and if you are struggling with your credit rating, then one of Mortgage House’s bad credit home loans can help you consolidate your debts and get your credit situation back on track. If you have any equity in your current home, or you have a number of other outstanding debts, such as personal or car loans, then refinancing it all into one of our bad credit mortgages can be a good step. Replacing bad debts such as personal loans with a good debt such as bad credit home loan can help. As can refinancing a home loan to pay off your credit card debt. Credit card interest is usually a lot higher than home loan interest, with the asset of a home giving you something in your back pocket to take advantage of at a later date. You may even be able to find a more suitable home loan, with less fees and charges and better features. Speak with our experts about our refinancer home loan options and how you can do it with a bad credit rating.
Where can I get a home loan with bad credit?
Mortgage House is proudly different than other lenders, including when it comes to bad credit home loans. We pride ourselves on being competitive with our interest rates and offer diversity with all our products. Central to that is providing a level of customer service unheard of in the industry. This takes on extra importance where bad credit home loans are concerned, when tailoring products and services are vital. Contact our lenders and we will actively listen to your needs to identify suitable loan and mortgage products for you and your current credit situation.