Bad credit comes in many forms, all of which have some impact when going for a home loan or re-financing an existing mortgage – whether they are paid in full or not. The most common forms of bad credit are:
- Mortgage or loan arrears
- Part 9 or 10 (bankruptcy Act)
- Bankruptcy (Sequestrian order)
- Company Liquidation
Even if a default or judgement is paid in full, it still stays on your credit history for 5 to 7 years from the date it was lodged and will be taken into consideration by a lender when assessing your home loan application. If the debt hasn’t been paid, it will fall off your credit report after the 5 or 7 years but the debt may be sold on to another company who might re-lodge it. So a debt you thought had gone away could come back to haunt you!
Bankruptcy, Part 9 & 10’s stay on your credit report for two years after being discharged. So if you have paid the debt out, you still may not be able to get a home loan through a mainstream lender. Impaired credit does not necessarily mean you can’t get funds to purchase a home or investment property, consolidate debt or refinance your existing mortgage. You just might need a more specialised lender.
At Second Chance we understand that sometimes things happen and everyone has a reason for their adverse credit. That’s why we have specialist lenders that will lend up to 90% of the value of the property at very reasonable rates for purchases and refinances, although the worse the credit, the larger the deposit required. Ex-bankrupts and people coming out of a part 9 or 10 should also have a look at the information on the bankruptcy page which will give you a bit of an idea about what the lenders who consider ex-bankrupts are looking for.
TIP: When we are consolidating an unpaid default or judgement in a home loan, we can often negotiate the debt to be reduced. Call now on 1300 139 883 to see whether we can save you money by reducing the payout!
Want to know more about bad credit? Click on the information PDF files below!
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