How to get a home loan if you have a bad credit history
Tue Nov 08 13:00:00 AEDT 2016
If you have a bad credit history or a lot of debt, a non-conforming home loan could be a good way for you to get on the home ownership ladder and regain a good credit rating with lenders.
What is a non-conforming home loan?
Non-conforming home loans have different lending criteria to standard mortgage loans, so they may allow you to borrow money even if you have a loan default or late payment registered against you. But they can come at a higher cost. Borrowers who take out non-conforming loans will usually have to pay higher interest rates, sometimes into the double figures – this is because of the high potential risk to the lender that you may not pay your loan back.
Who do I speak to about getting a non-conforming home loan?
Generally, non-conforming lenders are not major banks, because of the high risk involved. Talk to a Choice Home Loans mortgage broker about where to find the best non-conforming home loan for you.
Can I refinance a non-conforming home loan?
If you obtain one of these non-conforming home loans, the good news is that you don’t have to stay in the same situation for the life of your loan. Non-conforming lenders might lower the interest rate on your home loan after a few years of good repayment history – but make sure you understand the details before signing on the dotted line.
You may also have the option of refinancing to another loan or lender, again after you’ve proven your good credit. Your Choice Home Loans broker can help you identify any fees involved in transferring to another lender.
What if I have a lot of debt, but not a bad credit history?
There are two types of non-conforming home loans. If you have a bad credit history, your non-conforming loan will likely come with higher interest rates and fees. On the other hand, if you have a lot of debt, whether it be personal loans or credit cards, your non-conforming loan will look at consolidating all of your debt into one lump sum. This second type of non-conforming loan won’t necessarily come with significantly high interest rates, and does offer you a little more freedom than a bad-credit-history home loan.
Get the right advice
If you have a bad credit rating or you are trying to consolidate your debt, Choice Home Loans mortgage brokers can help you decide if a non-conforming loan is right for you. Our knowledgeable and experienced brokers can help you assess your options, so you can make the right choice for your financial circumstances.
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