Almost 30 per cent of Australian households were under mortgage stress at the end of 2017, according to Digital Finance Analytics. Considering the price of property here, it’s no wonder that this strain occasionally results in loan defaults and late payments.
Unfortunately these defaults in times of hardship tend to stick around on your credit score, which can make it more difficult to secure a new home loan or refinance. Luckily bad credit mortgages are easily available, and the approval process can be just as simple as a regular home loan.
How does the approval process work for a bad credit mortgage?
When applying for a bad credit mortgage, generally speaking the process is much the same as with a regular home loan. You’ll require proof of income, a deposit equal to 5 per cent or more of the property’s value, a further 5 per cent of savings to cover costs and, of course, proof of identity.
However, the process differs to a regular loan in one notable way. Bad credit lenders like our team at Redrock actually care about your story, so we’ll ask about your defaults and consider your explanation when offering you finance.
If you’ve got a solid explanation for your past financial indiscretions and have turned things around, we may be able to offer you a loan with rates and conditions similar to an everyday home loan. If you’re still struggling with your finances or have a small deposit we can usually still help you, but your loan may come with a higher interest rate.
Am I stuck in a bad credit mortgage for life?
If you’re in a jam and you need help with finance to buy a new home, complete construction or consolidate your debts Redrock should be your first call. We can quickly arrange finance to help out, and explain your options for the future, helping you to responsibly clear your debt and improve your financial situation.
You’re not stuck in your mortgage for life either. You can easily refinance and get a better deal once your situation has improved, so that you don’t have to pay high interest rates or loan fees.
If you need help securing finance, get in touch with Redrock Mortgage Brokers. We’re one of Australia’s leading specialist lenders and would love to help you start improving your situation today.