Getting a Home Loan When You Have Bad Credit
Applying for a home loan can be daunting if you know that you have a bad credit history, for whatever reason. Not only is it more difficult and often more expensive to take out a home loan when you have bad credit, but it can also be a risky decision unless you’re confident that you’ll be able to make the repayments.
However, under the right circumstances, a bad credit home loan can be the ideal solution to securing your dream home.
What is a bad credit home loan?
A bad credit home loan is a mortgage specifically designed for people with a bad credit history. There are a number of reasons why you might have bad credit, but the most common are defaults and bankruptcies.
It’s a legal requirement in Australia that lenders only loan money responsibly, meaning they need full confidence that the applicant will be able to make the repayments. For this reason, things like income, expenses, employment, deposit amount, and the amount you’d like to borrow will all be taken into consideration during the application process.
How does a bad credit home loan work?
A bad credit home loan works in much the same way as a standard home loan, except that the interest rates are usually higher and the loan amount smaller. The reason for this is that bad credit home loans are considered to be a higher risk by lenders, so they charge a higher rate of interest to offset this risk.
Given that interest rates are higher, the idea is to treat bad credit home loans as a temporary short-term solution, before refinancing to a more optimal outcome with lower interest when your credit report improves or when negative historical data (like overdue payments and court judgments, for example) is removed from your file.
The good news is that bad credit home loans are available from a number of specialist lenders, and at BFG Loans, we can help you research these lenders to find the ideal bad credit home loan for your specific needs and unique circumstances.
We can help you get a suitable home loan, regardless of whether your credit is good or bad
- Our friendly brokers are highly experienced in navigating all the various home loan options available to you, so that we can help you secure the best mortgage
- Our panel consists of more than 35 reputable banks and lenders
- When you trust us with your search for the right lender, you’re also providing a home for a family in need – 50% of our profits go towards building affordable housing for families that need it most
- At BFG Loans, we specialise in bad credit home loans, low deposit home loans, no LMI home loans, guarantor home loans and other first homebuyer loans
Get in touch
To speak with a knowledgeable BFG Loans mortgage broker today, don’t hesitate to book a consultation.