A bad credit score in Australia is anything ranging between 300 and 580, and nd an individual with such low credit scores is considered a risky borrower because of a history of unpaid debts or bills. Meanwhile, various factors may contribute to bad credit, like bankruptcies, debt balances, or previous delinquencies. And while banks often turn down the loan application of such borrowers, one can easily get bad credit loans from Finance One or other such reputable institutions. The lender, by assessing the financial circumstance of the borrower, develops a personalised approach to provide finance solutions. So if you want to get a home loan but are worried about your credit score, below is some vital information.
What Classifies a Bad Credit Home Loan?
Home loans designed for individuals with low credit scores due to paid defaults or bankruptcy are classified as bad credit home loans. These loans have high-interest rates and can also be associated with default risks. The term of these loans may range between short to medium. And the chances of getting approved for this type of loan are high when you borrow less than 80 per cent of the property value. Your loan may also be approved when you are discharged from your bankruptcy or made timely repayments in the past six months.
Who Offers a Bad Credit Home Loan Work, and How Does It Work?
Bad credit home loans are offered by specialist or non-conforming lenders. As such, a lender, by thoroughly assessing the black marks on the credit files of the borrower, formulates strategies to provide the loan amount. And bad credit loans are usually given to people with defaults on their credit rating.
A default on your credit file is the record of an overdue account like a phone bill, credit card bill, utility bill, or a personal loan, and it is classified as overdue if you are 60 days late. So the credit file showing any default makes you ineligible to lend money from any major banks as it states your inability to timely pay off your debts.
How Can You Get Approval for a Bad Credit Home Loan?
You may get approved for a bad credit home loan when you have the following:
Small paid defaults:
A small default of less than $500, which was paid almost six months ago, can help you borrow 95 per cent of LVR. Also, if you have paid defaults of $500 from any non-financial institution or $1000 from any bank, you are eligible to borrow 90 per cent of your property value.
Moderately paid defaults:
When you have $3000 in paid defaults, bad credit loans from Finance One or other such institutions can help you borrow up to 90 per cent of your property value.
Largely paid defaults:
These are categorised as any amount ranging between $3000 and $50,000. The approval for loans in case of large defaults is determined by assessing each individual’s situation and an explanation of the situation backed by solid evidence.
In the case of outstanding defaults, you can borrow about 90 per cent of property value. You may also be asked to pay your defaults before the approval of the loan amount by specific lenders.
Court writs or judgements:
You can get a bad credit home loan from any non-conforming lender when you have court writs or judgements. The lending amount may go up to 90 per cent of the property value.
Financial hardships often create obstacles to fulfilling your wishes. However, you can quickly turn your long-desired wishes into reality with easy access to bad credit loans. So, without further delay, choose a service provider to get a tailor-made solution for your home loan.