How Much Can I Borrow If I Have Bad Credit?
Individuals who have blemishes on their credit reports have mortgage options available to them. Bad credit no longer shuts the homeownership door to some individuals. You’ll face a trade-off with a higher interest rate. Once you’re in your home, there are tools to manage it.
For now, let’s explore the options available to homebuyers who have bad credit.
In Australia, credit scores range from zero to 1200. If your credit score falls below 400, it’s in the bad territory. Excellent scores fall between 833 and 1200. Very good scores range between 726 and 832. You’re still in the good territory if you fall between 622 and 725. Non-bank lenders, such as Mortgage House, work with homebuyers with credit scores between 525 and 621.
Several factors determine the amount a lender lends a homebuyer. A credit score is one. It tells a lender how an applicant handles financial responsibility. If you qualify for a bad credit home loan, you can borrow up to 95% of the property’s appraised value.
Most applicants receive 80% of the property’s appraised value. The corresponding interest rate lands at 5% to 6%. If the interest rate places a burden on your ability to repay the mortgage, you can take steps to improve your credit history. Then re-apply a year or two later.
Bad Credit and Mortgage Borrowing Conclusion
Bad credit no longer stops a homebuyer from purchasing a home. The best way to understand potential loan terms is to use one of our online mortgage choice calculators. Then speak with our loan specialists.