3 ways to get a home loan with bad credit

Juggling everyday costs with long term savings goals can be difficult, and there can be times when payments slip out of reach. These can show up on your credit history and undermine your efforts to get a home loan, but you needn’t despair.

By keeping these three tips in mind, you can work your way back into a lender’s good books. 

1. Work with a specialist broker

Depending how severe your credit history is, applying through conventional channels might not work for you. Brokers can often advise you against applying for a home loan and even turn you away, so it’s worth researching mortgage brokers who are experienced in working with credit impaired borrowers. They can put you in touch with the right lender for your scenario. For example, some lenders don’t use credit scoring and offer bad credit mortgages.

Rather than painting you with a broad stroke brush, a broker who specialises in non-conforming borrowers can find a loan to suit your financial situation.

2. Improve your credit scenario

While bad credit home loans can help you purchase a property, getting back in the green is something all borrowers should strive towards. Getting on top of debts and unpaid bills is the first step towards improving your chances of securing a home loan, but this can sometimes be easier said than done. Don’t be tempted to shift debt around. Taking out another credit card or personal loan will show up on your records.

It’s worth setting yourself a repayment schedule and work towards paying off small debts sooner rather than later. The quicker you begin to pay off your debts, the better. Be aware that even when you do pay back debts, under Australian law they remain in your records. While defaults aren’t a good look on any credit report, make the effort to show your lender that you want to improve – this can give them more confidence in supplying finance.

3. Get advice

Everyone stumbles over budgeting at one point or another, but if you’re struggling under the weight of numerous debt it could be worth seeking professional advice. Credit repair services can look over your credit history and identify mistakes, correct or remove incorrect entries and even remove black marks from the report.

This process can ensure your credit record reflects your financial circumstances as accurately as possible.