When applying for a home loan, your credit history is one of the most important parameters that lenders take into serious consideration. Low credit score or a credit history dotted with payment defaults and other financial troubles can often make it difficult for you to qualify for a traditional mortgage. But, that’s only half of the story. The good news is that despite having gone through a shaky financial time in the past, you can still qualify, and get a fairlygood home loan approved! Many people with low credit scores or even bankruptcies in Australia have managed to buy residential properties by arranging third party financing! If they can do it – you can do it too!
Approach the right companies to get bad credit mortgages & bad credit loans
The housing market has witnessed turbulent times lately but it is still possible for bad credit borrowers to realize the dream of owning a house!
The trick is to just approach the lenders who specialize in bad credit mortgages and bad credit loans. Reputed lenders who specialize in low doc (low documentation) loans can offer different types of flexible packages to bad credit borrowers.
Few pointers that you should be aware of
Even though bad credit home loans are not hard to get approved nowadays, it is still important to keep few important pointers in sight in order to make an informed decision:
- Be prepared to pay slightly higher interest –
- Bad credit mortgages and bad credit loans cost a bit more than their traditional counterparts. You can either opt for a bad credit loan scheme with slightly higher interest rate or a loan package with a variable interest rate (known as adjustable rate mortgage or ARM).
- Demonstrate that you’re financially stable now – You can demonstrate that you’ve a stable job, regular income or enough assets. In one way or the other, you can take some steps to assure a lender that you really are in a position to pay back the loan in its entirety on time.
- Opt for a low doc or full doc loan depending upon your specific requirements. If your credit history has just some minor blots, you can always go for a low doc loan with LVR or loan to value ratio as high as 80%!
- Always contact a bad credit home loan company or facilitator for your ‘individual assessment’ because every bad credit borrower has a unique financial condition. It is important not to go by what you’ve heard about such loans from others in the market or your friends and relatives.
- The best way to find out whether you can qualify for a competitive bad credit mortgage is to just contact one or two such companies!
Traditional banking institutions and other lenders do not entertain applications coming from bad credit borrowers. Instead of exposing yourself to frustration resulting from rejected loan applications, it is just advisable to apply where bad credit borrowers are really entertained.