Bad credit. It can stop you from pursuing the future you dream of. Imagine finding your dream home and a poor financial decision in your youth means you don’t get approved for the mortgage. Bad credit can happen to the best of us, but it needn’t ruin your plans. If you’ve been wondering ‘Can I get a mortgage with bad credit? The answer is yes.
If you have bad credit, fear of higher interest rates or stricter terms on a bad credit mortgage shouldn’t put you off applying for a loan. You just need to engage a professional, alternate lender that can walk you through your options.
What Is Bad Credit?
Bad credit refers to your credit score. Your credit score is calculated by an algorithm using the financial history in your credit file. It takes into account:
- Monies borrowed
- Number of loan or credit card applications you have made
- Your payment history (specifically whether you pay on time)
- Any court judgments, bankruptcy or personal insolvency information
- Any overdue accounts
- Unpaid taxes
The algorithm will score you somewhere between zero and 1200. This then places you somewhere on a five-point scale indicating your score as – excellent, very good, good, average or below average.
If you rank poorly on the scale, you are considered to have bad credit. The reason your credit rating matters so much is that it is indicative of your worthiness as a borrower. It’s a lender’s best indication of whether you are likely to repay the debt.
Can I Get A Mortgage With Bad Credit?
The short answer is yes, however it can complicate the process. Getting a mortgage with bad credit can take more effort and involve higher fees as well as stricter terms.
With bad credit, you will more than likely need to apply for a loan via alternate lenders. Banks are risk-averse – meaning that they will see a bad credit rating and decline your application almost immediately.
Alternate lenders tend to look deeper into your credit rating and consider the circumstances surrounding your rating. At NSW Mortgage Corp we understand that mistakes and hardship can happen. A few missed payments or inability to pay a debt due to change in circumstance or banking error shouldn’t stop you from buying your dream home.
How Is A Bad Credit Mortgage Different From A Standard Mortgage?
Getting a mortgage with bad credit will usually have different terms, interest rates and conditions than a standard mortgage. The reason for this is because you are recognised as a risk. The higher rates and stricter terms are designed to protect the lender and make it worth their while.
The exact interest rate and terms will be determined by the lender after careful assessment of your individual circumstances.These terms may not be appealing in the longer-term, however, they afford you the opportunity to secure a mortgage.
Ultimately, a mortgage with bad credit is possible. Focus on making some changes in your financial habits and you should have the opportunity later down the line to refinance. Once your credit score improves your choice or lenders and favourable rates and terms does too.
Will I Be Approved For A Bad Credit Mortgage?
Your best chance of securing a loan is still going to be tied to improving your credit rating. However, this takes time and any rejected applications for credit will further damage your rating. It is important that your application is done well and you understand the assessment criteria. You’re more likely to be approved if:
- You can demonstrate reliable repayment history on any current loans for the past 6-12 months.
- If you are requesting to borrow less than 80% of the property value.
- You have been discharged from any bankruptcy or part 9 agreements.
- You are not already overcommitted financially.
If you have bad credit, bypass the banks and go straight to an alternate lender like NSW Mortgage Corp. Alternate lenders work for you and with you to achieve loan approval, helping guide you through the process. Meaning, less risk of rejected applications and no further credit score damage.
Why would anyone lend to someone with bad credit? Generally, borrowers who are approved for bad credit loans rarely default again. Oftentimes their default rates tend to be lower than those with higher credit ratings. Non-conforming lenders recognise this and do not penalise you for having bad credit.
Your Home Ownership Journey
If bad credit is holding you back, NSW Mortgage Corp can help. We specialise in finding solutions for those with bad credit. We look beyond your credit score and assess your credit file as a sum of many parts rather than just good or bad.
Not only can we help you to secure a mortgage with bad credit, but our expert team can also support you to refinance when your situation has improved. Don’t lose time wondering if you can get a mortgage with bad credit. For a lender that looks beyond your score and a mortgage that fits your situation, contact NSW Mortgage Corp today on 1300 137 778.
