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If you want to get a home loan, most probably you came across numerous myths regarding bad credit, as the Internet is loaded with all kinds of information on this topic. Here is a top of the most common 5 bad credit home loan myths:
You can’t get a home loan if you have a bad credit history
Many Aussies who have a bad credit history do not consider taking out a home loan, as they believe it is impossible for them to access it. Why would you waste your time with an option that does not even exist for you, right? The truth is that there are lenders who offer home loans specially created for those who have a bad credit history and for their needs. Do a quick research online and find a specialist broker that can assist with this type of funding.
Only people with defaults go with bad credit home loans
Even though this type of loan was designed especially for those who have defaults or a previous bankruptcy, you can use it in other cases, too. For example, there are many Aussie’s that cannot get approved with a main stream lenders for various reasons such as, not enough deposit, credit file activity, cannot provide up to date financial when self-employed, sub-prime lenders can help with this type of situation.
You won’t get rid of the higher rate loan earlier than 30 years
A bad credit home loan is rather a short term solution. In 6-12 months you can get rid of it. As soon as your defaults expire, or you show good repayment history, you generally can refinance into a standard loan.
Lenders consider all defaults the same
Many Aussies think that no matter how big or small a default is, this will mean the same for the lender. The truth is that no bank will consider that a default under $2,000 is equal with one over $20,000.
They will also make a difference between an old default and a very recent one. A default or even more which are newer will mean lower chances to get a loan because they speak up about your current financial instability.
Lenders also treat paid and unpaid defaults differently. An unpaid one is destroying your credit history because it gives the lender the impression that you have ignored your problems. A paid one makes you look more responsible, as you have assumed the problem and did your best to solve it.
No lender will ever be interested in my story
This is a common misconception, but the truth is that a creditor understands that an event which had a powerful effect on your life – such as having an expensive surgery, marriage breakdown, or losing your job – also affects your financial situation.
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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.
