Bad Credit Home Loans
There are a lot of factors that can affect your credit history and make a lasting impression on your credit file. Things like missing payments on credit accounts, being made redundant, getting sick or injured. Maybe it’s getting divorced or simply forgetting to redirect your mail and missing some bills when they become due. Having credit issues from any of these situations can have a negative effect on your chances of buying a home. However there are a lot of lenders who offer bad credit home loans.
Here are five tips to help you get back on top.
Get your credit report under control
The first thing you should do is get a copy of your credit report . You need to know what any problems you may have before starting your credit journey. A copy of your credit file will list any issues you may have against your name.
Knowing what’s in your credit file will mean you then can make a plan to sort things out. Overdue debts and listings will stay on your file for five years. The good news is that your credit file should be updated if you pay out the balance of a debt or bring your account up to date. If there are any credit file issues, lenders need to know the corrective actions taken to address the problems. It’s always best to completely pay off any defaults you have. The new lender can then see you’ve made good progress and are willing to correct past mistakes.
If the information on your credit file is not accurate, you should make an immediate request to have it corrected. Any debts that are paid off should be marked as cleared. If items are there erroneously, they should be removed. Having these updated will help with your home-buying plans. If you believe there’s an error, speak to the credit reporting agency and the credit provider. Both can assist to get it sorted out. But remember, just because you have paid the debt, the credit provider will not simply remove the listing. They should however mark it as paid.
Shop around more
If you have issues with your credit file, there is a strong chance of lenders to say ‘no’. This is not the end of the world. There are others you can approach. Lenders will each have slightly different parameters they live by. If one lender won’t look on your situation favourably, don’t give up – another might well take a different view.
EXTRA HOT TIP: Shopping around is a smart thing to do. It’s important to note that multiple loan applications are also bad for your credit score. Be cautious and only apply for one type of credit at a time. Working with Dennis Smallwood will help you avoid more damage to your borrowing ability.
Explore the world of alternative lending
If an adverse credit file is the only thing holding you back, there are many non-bank lender with more flexible lending products. These lenders will tend to have a more flexible approach to their assessment rules. Previously, mainstream lenders were pretty much the only finance option and a bad credit file meant a death knell to getting a home loan. Thankfully the world has moved on and now many alternative lenders who offer a different approach. These type of lenders can consider your application on its individual merits and look at a wider range of things not a narrow set. Bad credit home loans are easier to obtain than ever.
Make sure you are in a situation to afford the repayments
Even though they are not mainstream lenders, a non-bank lender is still responsible with their lending practices. They will want to be sure you are in a situation to comfortably manage the repayments. Make sure you are comfortable that the proposed repayments will not be to big a stretch. No one wants you to be in hardship.
Look at alternatives to Lenders Mortgage Insurance (LMI)
When buying with less than 20 per cent deposit, you’ll need to pay a fee for something called Lenders Mortgage Insurance (LMI). LMI covers the lender if you were default and the bank needed to take recovery action.(IE repossession of the property and sale). LMI is taken out by a bank through a different provider. They have their own lending rules. They’ll look at any loan application as carefully as the actual lender. They may turn down a LMI application because of credit history or income source. This is even when a lender has given an approval.
A different way of doing this is rather than using a third-party mortgage insurer, some lenders offer a Lender Protection Fee (LPF), which gives them the flexibility to assess your loan without having to get outside approval from LMI providers. The LPF is like LMI, just offered by the lender themselves.
For more information, talk to us today. We’ll be able to assess your ability to lend with this type of lender. If you do qualify, we may be able to obtain a Pre Approval for you. Call us on 0419 856 669 or get in contact with us here. We’ll call you back.
The Home Loan Comparison Co. compares home loans from a much wider variety of banks than most people have time to consider, and we find the loan that suits your goals.
We are experienced, knowledgeable and dedicated to building ongoing relationships to keep on providing personal and valuable service that is rarely experienced when dealing with the banks.