Can You Get A Home Loan with Bad Credit (under 550)

Yes. But it's harder. That's why you should use a mortgage broker.

A credit score under 550 is viewed as risky by lenders, because to get a credit score that low there has been some kind of life hiccup that needs to be explored. Not all lenders use credit scoring and some have loan products directly made to help those with bad credit get back on track. Yes, their rates are higher, however they will help you get started with the view to refinance 3 years or so down the track when your credit score improves.

You can also use a credit clear agency to help you improve your score now. They will negotiate with the companies that put these marks on your file and help them get removed.

It's all about the lender when you have bad credit!

Your broker is best placed to help you know which lender to turn to and the rates they will apply to your new home loan. Traditional banks aren't very good for people with low credit scores and defaults in their repayment history. This is where the non-bank such as Liberty really shine. They develop products directly related to people with bad credit.

A broker will develop a unique approach to get a loan just for you.

A tailored approach is needed. I hate the cliche's too, but in this case it's warranted. If you have defaults, whether paid or unpaid, it's a whole process getting you approved. Walking into a big 4 bank simply won't work.

What solutions are out there?

Non-banks! These are the best placed to help you. Think Liberty and Bluestone, but there's plenty of providers - and the rates aren't disgusting.

Let's understand Bad Credit

You'll have bad or lower credit score if you've missed a bill payment, credit card, home loan or any type of registered loan. Bad credit shows missed payments all the way to bankruptcy. It is a negative mark on your credit file, which lenders take into consideration when assessing loan applications.

Adverse credit history: defaults, bankruptcy, court writs, or too many credit enquiries are alerts that something is going on. They don't, however, exclude you from a home loan.

Unpaid loans, bills & taxes: outstanding money owed, even if it's council rates, will cause an alert with most lenders. And it's fair enough; if you didn't pay your bills on time, why would you pay a home loan on time for 30 years? Well there's plenty of reasons, sometimes it's just an oversight.

Late mortgage payments: Banks will be cautious if you’ve missed home loan repayments in the last 6 months. This is a big one.

Is your company in trouble? This will raise flags if you're a director of a company that seems to be failing. This is because you will rely on this company to pay your mortgage.

Too much debt: do you have a lot of credit cards, personal loans and car loans already etc? This will be an alert to lenders.

Bad credit complicates getting a home loan. A mortgage broker can create a proper plan of action to get you into a home loan. You may never even have heard of these non-bank lenders, however they may just be the right lender to help get you started. And when your credit improves, simply refinance to a cheaper lender - once again with the help of a broker.

Loan Market Matthew Stack - 0423 237 242

https://broker.loanmarket.com.au/matthew-stack/

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