Has bad credit got you feeling blue? Don’t get too down – the reality is not everyone has a squeaky clean credit history. So no matter how bad your credit is, you shouldn’t be deterred from the possibility of applying for a home loan.
There are a number of myths floating around about bad credit, so if you’re interested in applying for a home loan one day it’s important to get the facts straight. Take a look at our top five bad credit myths and find out what you can do to set yourself up in the right position to apply for a your home loan.
Myth 1: I won’t be able to get a home loan if I have bad credit history
With the turbulent nature of today’s changing economy, many people with bad credit have been reluctant to apply for a home loan as they were told these types of loans no longer existed. However, this is not the case.
In fact, there are a wide range of lenders with home loans specifically designed for borrowers who have bad credit history. At No Savings, we understand homebuyers in Perth come in all shapes and sizes and the same goes for their financial situations.
So if you want more information on bad credit home loans our network of experienced brokers have the knowledge to help you make the right moves going forward.
Myth 2: Bad credit home loans are just for people with defaults
A common misconception about bad credit home loans is they’re only for people with defaults or past bankruptcies. And while they’re designed to assist these types of applicants, they also provide a great opportunity for those interested in protecting their credit record.
If you’re experiencing financial hardship and are at risk of a lender placing defaults on your credit record, bad credit home loans may be your best option. Once you have defaults listed, it can affect your ability to obtain finance for up to 7 years. So acting quickly can stop the situation before it gets worse and defaults are listed.
Consolidating your debts into your home loan can get you back to a single repayment that is affordable. And while the interest rate may be higher, the overall repayment may be less than what you were paying on multiple debts. We can put you in touch with one of our expert finance broking partners who can give you more information around whether this is the right option for you.
Myth 3: All defaults are treated the same
Many borrowers are under the assumption lenders treat all defaults the same, no matter how big or small, but this is not true. When deciding whether you’re eligible for a bad credit home loan, a lender will take many factors into consideration including the size of your defaults. So if your defaults are relatively small you’ll most likely be treated with more understanding than if your defaults were higher.
The recency of your defaults also play a significant role. If you have one or more recent defaults, it may be harder to secure a loan compared to having older defaults because lenders need to see an accurate depiction of your current financial situation.
Whether your defaults have been paid off or not also factors into whether you’ll receive a bad credit home loan. Unpaid defaults on your record don’t look good because it shows you’ve ignored the situation and haven’t taken responsibility. However, paid defaults show you’ve tried to make amends and resolve the issue and as a result and lenders are inclined to look at your applications more favourably.
Myth 4: I’ll be stuck in a higher rate home loan for longer
Many people are under the impression if you enter into a bad credit home loan you will be locked in for at least 30 years. However, this could not be further from the truth. Generally speaking, bad credit home loans are more of a shorter term solution to enable you to consolidate your debt and pay it off quicker.
At No Savings, we have a selection of bad credit home loan options from a network of brokers that can help you make your dream house a reality. For example, our Savings Plan can help remedy your bad credit rating and make more loan products accessible to you right away.
So before applying for a bad credit home loan, make sure to do your research and ensure you speak to an experienced lender or broker you can trust to guarantee you get the right advice for your specific needs.
Myth 5: Lenders aren’t interested in my story
When it comes to obtaining a bad credit home loan, many borrowers worry lenders won’t understand their specific set of circumstances. Long story short – yes they will. The reason they’re interested is because the story behind your credit issues is important. It will fill in the blanks for your lender and help them to understand why your financial troubles got to this point.
Lenders will take a good look into your credit report to firstly identify your score and secondly find out why you have bad credit to begin with. However, determining whether you’re eligible for a bad credit home loan goes beyond the “what” and “why”. Lenders want to know the details so they can understand and see if your situation is a once off or likely to happen again.
At No Savings, our highly qualified network of brokers take everything into consideration when determining if you’re eligible for a bad credit home loan. They look at the steps you’ve taken to rectify credit issues you’ve had in the past and work with you to come up with a the best plan moving forward.
Interested in applying for a bad credit home loan? No Savings through our network of independent brokers has been helping customers obtain finance to achieve their dream of homeownership for nearly 7 years. One call or email is enough to get the ball rolling and we’ll have you in contact with one of our experienced network of brokers who can let you know about your finance options just by asking some simple questions. It really is that easy – so get in touch today.