How to Find the Right Mortgage Broker for Bad Credit Applicants

If you’re ready to enter the property market, it’s important to consider how your credit history and credit file might affect your mortgage options.

While a bad credit history may make it more difficult to secure a home loan, that doesn’t mean that your dream of home ownership is impossible. In fact, some mortgage brokers specialise in helping people access bad credit loans that can lead to greater financial security in the long term.

By helping you access loans that suit your needs and from lenders that don’t auto-reject you, a mortgage broker can drastically improve your chances of securing a loan you can reliably pay back, which is enough to cover your property value as required.

Are you looking for a home loan and feeling worried about a poor credit history? Here’s what you should know and how a specialist broker can assist you!

What is a bad credit home loan?

Bad credit home loans are home loans designed to support people with a poor credit history and a bad credit file. Bad credit mortgages can help you get into a home of your own sooner, even if you have a low credit score.

Typically, bad credit home loans are offered by specialist lenders, sometimes referred to as non-conforming lenders. Most mortgage lenders have strict financial requirements, such as a good credit score, but a specialist lender can offer different loan options to people with bad credit.

This option might sound perfect for you! But it’s important to remember that a bad credit mortgage will likely come with a catch. Often, you’ll be required to pay higher interest rates and other buying fees to compensate for the risk of defaulting on home loan repayments.

Do mortgage brokers look at your credit score?

Your credit history and credit file is a key consideration for many lenders and brokers as part of the eligibility criteria for most loan applications.

By reviewing your credit rating and associated financial history, lenders can determine how well you meet relevant lending criteria, as well as identifying any credit problems that could jeopardise your ability to make regular monthly repayments.

When evaluating your credit history, your lender will take a variety of factors into account. Lenders may look for late payments or current debts, as well as previous loan data and potential bankruptcy history.

What do bad credit mortgage brokers do?

When you’re looking for a non-conforming home loan, working with a skilled and experienced bad credit mortgage broker can help you achieve the best possible outcome towards your home buying goals.

Bad credit mortgage brokers can help to assess your credit score and support you to engage in credit repair activities, include debt consolidation and repayment.

Mortgage brokers who specialise in helping Australian borrowers with poor credit history can look for the best bad credit mortgage lenders with the lowest interest rates and best-value lending options.

Working with a broker in this way can improve your chances of securing a home loan in spite of your credit score while also ensuring that this loan suits your needs and your financial position.

How do you choose a bad credit mortgage broker?

When looking for a bad credit mortgage broker, there are a few things you should keep in mind.

First, look for mortgage brokers who have experience working with bad credit mortgages and who are understanding of your situation. You need a broker who will listen to your concerns and help you explore a range of home loan options without passing judgement.

Additionally, it’s a good idea to consider your broker’s industry connections. Some brokers may have specialist lenders in their network who they can turn to when they need to ask questions or when they want to find you a great loan.

Finally, choose a broker who takes the time to understand your financial position and can offer practical help, assisting you to improve your credit score if possible and potentially obtain better loan value, even with a bad credit mortgage.

What if you have bad credit and can’t get a home loan?

In some cases, a poor credit score may stand in your way and prevent you from securing the loan you need to purchase your dream home, even with specialist lenders and higher interest rates. If your bad credit history prevents you from getting a home loan, there are a few options you can explore.

First, consider whether there is anything you can do to improve your credit score. While some bad credit history details are permanent, others can be resolved if you clear your debts.

Next, think about your home buying budget. You might not be able to obtain a bad credit home loan you cover an expensive property value, but lowering your loan amount may make it more likely that you’ll be able to borrow enough to purchase a cheaper home.

Last but not least, talk to a mortgage broker! Working with a new broker who is experienced with bad credit home loans can help you access new lending opportunities that could help you start to climb the property ladder.

The benefits of choosing the right mortgage broker

Choosing the right bad credit mortgage broker to help you can make all the difference, providing a range of benefits that may support your buying journey.

Experience

A bad credit broker knows exactly how bad credit home loans work and what financial aspects are at play.

With years of experience, your broker can rely on advanced industry knowledge to advise you on the property market and your credit options.

An experienced broker may even be able to connect with new bed credit home loan packages that give you a better chance at borrowing success.

Expertise

Your bad credit broker can use industry expertise to navigate the real estate market with confidence and ease.

A good broker knows what it takes to get great home loan offers, even if you have bad credit. This can help you access mortgage options that work for you.

A capable broker can use what they know about home loans to identify alternative pathways and different lenders who may be able to offer you a loan.

Protection

Finally, a good mortgage broker can protect your interests throughout the loan application process.

Your broker can help you understand legal fees and requirements while helping you avoid mistakes that could get you in financial trouble later on.

Taking your unique circumstances into account, your broker can ensure you only contact reputable lenders and don’t pay more than you have to.

Bad credit related questions to ask mortgage brokers

Still unsure about how working with a skilled mortgage broker can help you secure the home loan you need to fund property of your dreams, even with a low credit rating?

Here are our answers to a few frequently asked questions.

What will the borrowing costs be?

Borrowing costs apply to any home loan. When you’re working with non-conforming lenders, these fees may be higher in order to protect the bank’s financial interests from potential credit defaults.

Your borrowing costs will vary on a case-by-case basis. Your mortgage broker can help you understand these costs and avoid paying more than required for a bad credit loan.

Are there any hidden costs?

For many borrowers, the prospect of hidden costs can be intimidating, especially if you’re seeking to secure a bad credit loan.

Some extra costs may apply, including borrowing fees, legal fees, stamp duty costs, and so on. However, your mortgage broker should help you understand and plan for these costs upfront so that there are no nasty surprises after you’ve already taken out a bad credit loan.

Can I buy a house with a credit score under 500?

Even with a low credit score of under 500, it may be possible for you to purchase your own home!

Your borrowing options will vary based on the value of the property you want to purchase, as well as the extent of your bad credit rating. Other influencing factors may include your existing debts, your regular income, and the interest rates and mortgage packages you are willing to accept.

Your broker can help you explore your option and find a bad credit home loan that suits your needs and eligibility.

Can I refinance my loan?

It is possible to refinance a bad credit home loan later on!

Depending on your circumstances and credit report, you may be able to switch your bad credit home loan to a tradition mortgage. In other cases, you may be able to refinance to another bad credit home loan with different mortgage features or a better interest rate.

How many loan products can you provide for my case?

A skilled mortgage broker may be able to provide you with a variety of bad credit loans to choose from, allowing you to choose the right loan to suit your goals.

The exact number of loan options we can provide will vary based on your financial position and borrowing power. The best way to move forward is by talking to an expect and understanding what is available.

Summary

Even if you have a bad credit history, it is possible to find a great home loan that supports your mortgage goals, even if this package isn’t with one of the major banks.

By understanding how credit works and what you can do to improve your profile as a borrower, you can put yourself in a better financial position and start to access loan options that align with your circumstances.

No matter what has caused your bad credit history, working with an industry professional, such as a mortgage broker, can help you navigate the home loan market with greater confidence.

If you are strategic and access appropriate support, it is possible to find lenders who are willing to help. You’ll discover loan packages that work for you and help you make a property purchase sooner.

Need help finding a lender?

See our list of top-10 brokers in Sydney and Melbourne to find the right broker for you.