Can I stil get a loan with bad credit?

 

I Have A Bad Credit........Can I Still Get A Loan?

 

Non-conforming lenders, also known as specialised or sub-prime lenders exist to provide bad credit loans to those people who do not fit with the traditional bank lending criteria. 

Typically their credit file will have a default, judgment, clear out, Part 9 or Part 10 or bankruptcy listing notated on it.  The listing will notate the value of the default, if it is paid or unpaid, if paid - how long ago it was paid, date of listing and when the listing is to be removed.

Unfortunately paying the default or judgment after the event will not have it removed.  Once there is a credit impairment listed on your credit file, it remains there (even if it is paid) for five years.  A more serious default or a bankruptcy can be listed for up to seven years.

There are several non-conforming lenders in the Australian market place and they can accommodate the following loan types:

- Debt consolidation, unlimited facilities and including ATO debts

- Refinance with cash out for other acceptable purposes

- Purchase of an owner occupier home

- Purchase of an investment property

- To raise capital for business purposes (including working capital) providing there is a residential security

Where there is a non-conforming loan application the lender is assuming the greater risk position.   To offset the risk the rate and fees are set at a higher level than the typical rates and fees of a mainstream lender.

Keep in mind a non-conforming loan is a short term solution and the benefits can outweigh the downside.  Consider a situation where your default will continue to show on your credit file for the next five years.  In a rising home market, where prices are increasing 5% year on year, a $300,000 house will rise in price to $382,500.

Set out below is a table indicating the level of impairment and the loan to value ratio that a bad credit home loan will be extended to:

 

Credit Impairment

Criteria

LVR

 

Unlimited adverse credit impairment (paid or unpaid) 12 months plus prior to loan application

 

One month mortgage arrears within the last six weeks at the time of loan application

 

 

No limit to the number of debts to be consolidated

Purchases –90%

Refinances – 85%

Equity Releases – 85%

Unlimited adverse credit impairment (paid or unpaid) 12 months plus prior to the loan application

 

Two adverse credit (paid or unpaid) 12 months or less prior to loan application

 

Two months current mortgage arrears

 

No Limit to the number of debts to be consolidated

Purchases –80%

Refinances – 80%

Equity Releases – 80%