5 ways to sort out a home loan application with credit issue

If you have credit issues from any sort of situation there are things you can do to help your chances of buying a home. Here are five tips to help you get back on top

Lots of things can affect someone’s credit history, getting sick, redundancy, divorce, forgetting to redirect bills if you move, or just an accidental slip on timing can mean late or even missed payments.

If you have credit issues from these sorts of situations there are things you can do to help your chances of buying a home. If you are wondering how to get a home loan with bad credit score in Australia!

Here are five tips to help you get back onto your bad credit and get easy home loan. If you have more questions feel free to reach out to our Mortgage Expert

 

1. Get your credit report under control

The first thing you should do if you do have credit problems is get a copy of your credit report - to make sure you are aware of all the problem records you might have against your name.

Knowing exactly what’s in your report means you can then make a plan to sort things out. Debts that are overdue will stay on your file for five years, but the good news is that your credit file can be updated if you pay out the balance of a debt. If you have credit issues then potential lenders will want to know what actions you’ve taken to address those problems, so it’s best to get any defaults paid off so they can see you’ve made good progress.

If any information on your file is not accurate, make an immediate request to have it corrected so it doesn’t continue to affect your home-buying plans. If you think there’s been an error speak to the credit reporting agency and the credit provider involved to get it sorted out.

2. Shop around more

If your  credit file got a no with the first lender you tried, there are others you  can approach; each lender has slightly different sets of boxes to tick. So if  one lender didn’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, but it’s important to remember that multiple  credit applications in a short time frame can be bad for your credit score.  So, it’s best to be cautious and only apply for one type of credit at a time.  Working with someone like us will help you avoid these traps.

3. Explore the world of alternative lending

If your  credit history is the only thing holding you back, you might be able to get a  mortgage from a non-bank lender with a more flexible lending product.

The banks  tend to have very fixed home loan assessment rules. Once upon a time they  were pretty much the only option. Thankfully the world has moved on and now  alternative lenders like Pepper Money offer a different approach. They can  consider your application on its individual merits and look at a wider range  of things not a narrow set.

4. Make sure you are in a situation to  afford the repayments

A non-bank  lender is still responsible with their lending practices and they’ll 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.  

5. Look at alternatives to Lenders  Mortgage Insurance (LMI)  

If you’re  trying to buy a home with a deposit of less than 20 per cent, you’re likely  to find you need to pay a fee for something called Lenders Mortgage Insurance  (LMI). It covers the lender if you were to miss payments down the line. LMI  providers are a separate business and have their own lending rules – so  they’ll consider any application as carefully as the main lender. They may  turn down a LMI application because of credit history or income source, 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 – like Pepper Money – can offer a Lender Protection Fee (LPF), which  gives them the flexibility to assess your loan without having to get outside  approval from LMI providers.

If you’d like  more information, talk to us today about how we may be able to put you in  touch with a lender that can help if the major banks say ‘no’ to your loan application.  
 
Disclaimer: Original content source:
Pepper Money. It is designed for publication through Accredited Brokers, to provide you with factual information only, and it is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, but neither Pepper nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on +61 3 7035 0917

Deals Mortgage is a professional Mortgage broker based in Bentleigh East, Melbourne. We put our customers first and ensure you get the best deals from our panel of 40+ lenders. We work closely with you through out the process to help you acheive your financial Goals. Till date we have worked with multiple clients all across Australia, We serve major states in Australia, with our presence in Melbourne Victoria, we cover Queensland, Auralia and South Australia. Our happy clients are present across the suburbs of Tarneit , Pankenham, Truganina, Cranbourne, Mckinnon, Werribee, Clyde, Ormond, Point Cook, Cheltenham, St kilda, Wyndham, Brighton, North Craigieburn and Bentleigh.

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