The Mortgage Agency
Bad Credit Home Loans
Have past credit issues made your dream of getting a home loan feel out of reach? Don’t worry, you’re not alone.
Many Australians find themselves held back by an old default or a rough financial patch. But the good news is that you’re not out of options.
The Mortgage Agency is a boutique mortgage broker based in Sydney that specialises in helping Australians find suitable home loans, even if they have what banks perceive to be a bad credit history.
We focus on finding the best solution for your situation. Additionally, we’ll support you throughout the entire process. So, if you’re ready to take a positive step forward towards realising your dream, please get in touch. We’re here to help.
How to get a home loan with bad credit
Contrary to popular belief, having bad credit doesn’t automatically disqualify you from getting a home loan. It just means you’ll need a more strategic approach to applying for one.
In the mortgage world, “bad credit” can refer to a variety of matters. They may include missed repayments, defaults, poor credit scores, credit reporting issues, or even bankruptcy.
Many people assume a bad credit score means a flat-out no from lenders. But that’s not always the case.
Different credit scores, which can run from “excellent” to “below average”, affect how lenders assess risk. So, while major banks may only consider high scores, specialist lenders and non-bank lenders take a more nuanced approach. Often, this involves looking at your current financial situation and borrowing power.
By focusing on these elements, you may still be eligible for a home loan if you can demonstrate some of the following:
- Have been employed for more than 6 months or self-employed for at least 12 months
- Can provide a deposit
- Have notably improved your credit rating over the last 1-2 years
- Are not currently in bankruptcy or under debt agreements
- Can show recent, consistent behaviour of making payments on time
Ready to buy your first home or upgrade, but have a few credit challenges from your past? Reach out to our team. We’ll guide you through your home loan options and help you set up features like a redraw facility to manage your loan more easily.
What are bad credit home loans?
Bad credit home loans are a mortgage option designed for “bad credit borrowers”. In other words, those with past defaults, missed repayments, court judgments, or credit file issues.
The great thing about these types of home loans is that they help people who might not meet the strict lending criteria of traditional banks.
Our lending specialists work closely with lenders who consider your full story, not just your credit report.
This means looking at your income, savings, employment history, and your recent financial conduct. So, if you’re dealing with poor credit but have regained control of your finances, don’t give up hope.
There’s a good chance we can match you with the right home loan.
The different home loans available in Sydney
The more you understand what options are available to you, the more you’ll be able to make smarter decisions about which one is right for you.
With that in mind, let’s go over five of the common home loan types that might be suitable for borrowers with bad credit.
Fixed-rate loans
These offer stability by locking in your home loan rate for a period, usually between one and five years. It can be a good option for those wanting more control over how they budget and manage their cash flow.
Variable-rate loans
As interest rates can rise or fall in line with the actions of the RBA, the repayment amount for these types of loans will vary.
However, they do often come with flexible features such as redraw facilities or offset accounts. Some Sydneysiders find this to be a sound buffer.
Split loans
As its name suggests, these types of loans combine the best of both worlds. Part fixed and part variable.
Low Doc loans
Low Doc loans are designed for self-employed borrowers who can’t meet standard documentation requirements. They can often be a helpful option for bad credit borrowers, too.
Debt consolidation loans
If you’re juggling multiple debts, this can be a good option to simplify your repayments into one single amount. This can also lower your total outgoings.
At The Mortgage Agency, we compare home loan options from a wide range of mortgage providers to find the best match for your situation.
Our mortgage brokers work with non-bank and specialist lenders across Australia, who understand complex financial backgrounds to find the most appropriate option for you.
Getting a home loan with a bad credit history
If your credit history is less than perfect, don’t worry, we are here to help. Here is an overview of the process we adopt to find your best possible home loan solution.
Step 1: Free consultation
We’ll begin with a no-obligation chat, which is designed to help us understand your goals and current financial standing.
Step 2: Credit analysis and guidance
We then assess your credit file to identify what current credit issues you are facing. After doing this, we then determine the best steps for credit repair.
Step 3: Loan option identification
Once these steps have been outlined, we’ll shortlist the best lender options for your situation.
Step 4: Application and documentation support
We handle the entire loan process. This includes submitting documentation that meets the criteria of each lender.
Step 5: Loan approval and closing
Once approved, we guide you through the settlement process. We also stay in regular touch in case we can assist with future loan refinances or comparison rates.
Why choose The Mortgage Agency?
At The Mortgage Agency, we specialise in helping Sydneysiders with bad credit to find suitable home loans that won’t put a strain on their financial situation.
Based in four locations across The Harbour City, we take a customised and holistic approach to every loan application and provide you access to specialist and non-bank lenders. Moreover, we structure your application to give you the best possible shot at approval.
Whether you’re managing credit issues or recovering from financial setbacks, our expert mortgage brokers are ready to help you secure a home loan that best suits your situation.
Contact our friendly team today to reignite your home loan search.
FAQs
In our experience, specialist lenders and non-bank lenders offer the most accessible loans for bad credit borrowers. That is because they look at your current ability to repay and not just your credit history.
The lowest credit score most lenders will accept for a home loan application is 500. However, some may consider scores as low as 300 depending on factors like income, deposit size, and recent repayment history.
You cannot intend to live in the property you buy. In addition, you cannot buy vacant land or international property with your loan.
Type of security and location of security also varies from lender to lender.
Even with a bad credit score, if you have equity in your property and stable income, you may be eligible to get a home equity loan.
To find out how much your loan repayments might be, it is a good idea to use an online loan calculator. Alternatively, speak with us directly to receive a more precise idea based on current home loan rates, loan terms, and your borrowing power.
In most cases, bad credit home loans typically have higher rates. That said, they can be refinanced to something more favourable at a later date, as your credit rating improves.
Yes, this is possible, particularly if you demonstrate consistent repayments. If you do a future loan refinance, it may reduce your rate and fees.
Yes, but the context matters. Most lenders will still assess your application even if you have past debts or missed repayments. They’ll look at the age of any defaults, your recent mortgage repayment history, and how consistently you’ve handled your finances since.
Some lenders specialising in consolidation for bad credit or secure loan products will also pay close attention to your property value and responsible lending requirements to make sure the loan is manageable.
Some lenders do offer redraw and offset features on bad credit mortgage products, but it depends on the lender’s credit policy, your deposit size, and your overall financial profile.
We can help you compare loan repayments and variable rate options to find a loan that gives you flexibility without unnecessary fees and charges.
If you’re thinking long-term, refinance home loans could become an option once your credit improves. We also factor in costs like stamp duty and whether lenders’ mortgage insurance applies based on your loan-to-value ratio.