Finance Australia :: Articles

How to Buy a House with Bad Credit

Can you buy a house if you have bad credit?

How to Buy a House with Bad Credit
Most people would expect that a bad credit rating would make it impossible to get a mortgage to buy a home - but it's not as simple as that. Can you buy a house with bad credit? The short answer is YES, but it is not all that easy.

Unfortunately bad credit can haunt you for the rest of your life. If there are bankruptcies or foreclosures on your credit report, you know how hard it is to get any line of credit.

Lenders and creditors simply look to as a too big of risk to loan money to but we know that, even though mistakes were made in the past, your financial situation and behavior can be reformed.

Some lenders understand this as well, and the sub prime lending market has grown and become very competitive.

The Lending Market

The lending market can be broken up into two main segments, the prime, those with average to good credit who are not huge financial risks.

Insuring your most valuable asset
Image for Insuring your most valuable assetWhile many people would consider their home or their car to be their most valuable asset, it's your ability to earn an income that is most important in shaping your financial future. Statistically, two thirds of working Australians will suffer an injury or illness that will sideline them for 90 days or more. The majority of these people would not be able to pay their mortgage or meet car finance and other loan commitments without adequate income insurance.

Then there is the sub prime market, with those who have poor to very bad or no credit.

Lenders can give ratings to a certain sub prime client giving them a rating from A-D: A being the best rating and D being the worst.

When you fall into the C or D category, you are considered very high risk and more likely to default on a loan than that of a person with an A or B rating.

Sub Prime Lenders

Sub prime lenders generally give loans to even the highest of risk cases.

They look at the same information that a prime lender would look at to evaluate the type mortgage you can have.

They look at credit history, income, expenses and long term debt. If you do have foreclosures, bankruptcies, delinquent payments, and outstanding debt, they will take all of this into consideration.

If you can show steady employment, a good income, an effort to pay back the money you owe and are doing it in a timely fashion, you are more likely to get a better rate than that of someone who is not taking any steps to fix their credit.

Sub prime lenders can loan the money you need by protecting themselves. They do this through higher rates and fees that prime lenders would not charge.

A Word of Caution

Be careful, because some sub prime lenders have been known to take advantage of your poor credit history and charge a ridiculous amount in fees and charge you a too high of interest rate even for a poor credit case.

Fortunately for the consumer, this sub prime market is extremely competitive and you do not have to accept the first lender who offers to loan you money. You actually have the luxury to shop around and compare rates, even for the worst of credit cases!

So check online for tools that can aid you in finding and comparing sub prime lenders. The internet is a good place to start your research.

You can also ask for referrals from family, friends and even local bank. Don't allow credit mistakes in the past to dictate how you live your life today.

Buying a home is still an option regardless of your credit history. And, as long as the sub prime market continues to be competitive, you, the consumer is at a huge advantage.

It is always a good idea to take steps to repair your credit, and buying a home can aid in this.

If you make you mortgage payments on time every month, then you can watch your credit grow!

Sub prime lenders specialize in this area, so allow them you help you make your credit score even better!

Be sure the sub prime lender you use is trustworthy and qualified. There are sharks in the industry, so be sure to ask for references and look at licenses.

So, go buy your home and repair your credit at the same time! Take advantage of the opportunities you have at your fingertips.

Published: Monday, 23rd Aug 2021
Author: 9


Finance Articles

Essential Tips for Choosing the Right Personal Loan in Australia
Essential Tips for Choosing the Right Personal Loan in Australia
Personal loans are a type of financing option that individuals can use to fund various personal expenses. Unlike mortgages or car loans, they aren't earmarked for a specific purpose, giving borrowers more flexibility in how they use the funds. These loans are usually unsecured, which means you don’t have to provide collateral to borrow money. - read more
The Role of Business Insurance in Protecting Your Australian Enterprise
The Role of Business Insurance in Protecting Your Australian Enterprise
Starting and running a business in Australia can be an exhilarating experience, full of opportunities for growth and success. However, it also comes with its fair share of risks and uncertainties. From unexpected natural disasters to potential legal disputes, the threats to the sustainability of a business are ever-present. This is where business insurance becomes pivotal as a protective tool for Australian enterprises. It provides the much-needed safety net to help businesses mitigate potential losses and continue operations with confidence. - read more
The Ultimate Cheat Sheet for Aussie Borrowers: Top Loan Comparison Strategies
The Ultimate Cheat Sheet for Aussie Borrowers: Top Loan Comparison Strategies
In the dynamic world of Australian finance, securing a loan can be a pivotal move for individuals seeking to achieve their financial goals. Whether it's for purchasing a dream home, expanding a business, or simply consolidating debt, the importance of smart loan comparison cannot be overstated. With an array of lending products available, borrowers are often faced with a bewildering choice. That's why equipping yourself with powerful loan comparison strategies is not just important, it's essential. - read more

Finance News

Cash Flow Crunch: How Rising Costs Are Impacting Australian SMEs
Cash Flow Crunch: How Rising Costs Are Impacting Australian SMEs
18 Oct 2025: Paige Estritori
Australian small and medium-sized enterprises (SMEs) are currently navigating a challenging financial landscape marked by escalating operational costs and constrained access to external financing. This environment has compelled a significant number of business owners to inject personal funds into their ventures to maintain liquidity and sustain operations. - read more
Funding Divide: Tech Startups Thrive as Traditional SMEs Struggle
Funding Divide: Tech Startups Thrive as Traditional SMEs Struggle
18 Oct 2025: Paige Estritori
The Australian business financing landscape is experiencing a pronounced divergence. On one hand, technology startups are attracting substantial venture capital investments, while on the other, traditional small and medium-sized enterprises (SMEs) are encountering increasingly restrictive lending conditions. - read more
Resilient Growth: Australian SMEs Set to Invest Amid Challenges
Resilient Growth: Australian SMEs Set to Invest Amid Challenges
18 Oct 2025: Paige Estritori
Amidst a backdrop of economic uncertainty and rising operational costs, Australian small and medium-sized enterprises (SMEs) are demonstrating remarkable resilience. A recent survey by the National Australia Bank (NAB) reveals that 60% of SMEs plan to invest in their businesses over the next 12 months, focusing on areas such as technology upgrades, new product development, and workforce expansion. - read more

Free Loan Eligibility Assessment

Loan Amount:
Postcode:
All quotes are provided free (via our secure server) and without obligation. We respect your privacy.

Knowledgebase
Discount Rate:
The interest rate used to determine the present value of future cash flows, often used in discounted cash flow analysis.