5 ways to get a home loan with bad credit

Published on December 4th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Like many others, you may be riddled with bad credit. Regardless of how you get yourself in this position, your past financial behaviour is influencing your present and your future, and it may make it difficult for you to get a home loan. However, difficult does not mean impossible. Here are 5 ways to get a home loan with bad credit.

Show that you are more financially responsible now

Even though your past decisions are still haunting you, it is essential for you to demonstrate that the past remains in the past and that you have had time to improve. Bring proof that you are making all of your payments on time, that you are able to save, and that your bad score is a thing of the past. Most institutions will take this into consideration and will be able to see that you have learned from your mistakes and turned yourself around for the better. This will increase the likelihood of you getting a loan, even if you have made some questionable financial decisions in the past.

Consult a professional

Did you know that there are specialists who can help you out with your bad credit report? Ask for help from a professional who knows what to do to wipe out some of your bad financial history. With a little luck, you will be able to “clean up” your credit score and arrive at a significantly more positive balance that will make you more attractive in the eyes of lending companies.

Skip the mortgage lenders who take your credit score into account

If you’ve ever tried to get a loan, you will know that most lenders use an automatised system that analyses the suitability of your application based on your credit score. This means that no one is actually looking at it, and you are most likely rejected from the get-go, simply because your credit history is less than stellar. Now, it’s important to know that not all lenders operate this way. Credit score is not relevant to all of them, and you have a much better chance of getting a home loan with bad credit when you go somewhere where they actually look at your application.

Don’t apply to every lender you consider

It may be tempting to just start applying left and right, in the hopes that someone will say yes. However, that is a major mistake, because each and every rejection will show up on your credit report, and it won’t be in your favour. Do some thorough research, inform yourself about the entire process, and then opt for those lenders who are most likely to give you a positive answer. Otherwise, you are just sabotaging yourself.

Opt for a specialist lender and broker

When you are not able to circumvent the system in any way, your only solution may be to choose to work with a specialist lender. This is a company that works with people with bad credit, but be warned that the high level of risk you represent means that the interest rate will rise accordingly. High-interest rates are not ideal, but when all other options are dead-ends, this last resort can be the one that saves you.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for home loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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