Bad credit home loan comparison

Apply and get approved for a home loan, even with bad credit

Rates and Fees verified correct on October 27th, 2016

Do you have defaults or other negative listings on your credit file? You might still be able to get a home loan

In the past, once you had a mark on your credit file there was nothing you could do about it other than to put your plans on hold for five or more years.

Now, there are some specialist lenders who can offer home loans to you even if you have bad credit.

These lenders offer loans to those with paid and unpaid defaults, and even discharged bankrupts, but before you apply be sure to consider why you ended up with bad credit, if there are possible credit repair options and how to keep a clean credit history. Read on to see our top tips for getting approved for a home loan with bad credit.

Speak to a lender who'll look at more than just the numbers

DetailsWhat can they help with?
State custodians bad creditState CustodiansState Custodians have a range of home lending options for borrowers of all types including options for those who have some marks on their credit history. Minimum eligibility requirements are you must be employed or self-employed with a steady income and own a property or have at least 10% deposit.Purchasing, Debt Consolidation, RefinancingEnquiremore info
ClickLoans The Online Home Loan Bad CreditClickLoansClickLoans is an online-only lender that offers home loans for both self-employed and PAYG borrowers who may have bad credit.Purchasing, RefinancingEnquiremore info
Pepper MoneyPepper Home LoansPepper specialises in providing fair home loans to those who are credit impaired - from small defaults all the way up to discharged bankruptcies. They also cater to self-employed borrowers.RefinancingEnquiremore info
FreedomLoanstable1Freedom LoansFreedom Loans have over a decade in experience in helping Australians with bad credit to obtain the best possible home loan they qualify for. They can help you even if you’ve been declined elsewhere and assist borrowers who are full time, part time, casual or self-employed.Purchasing, Building, RefinancingEnquiremore info

Two of the main points of criteria are for getting a home loan are:

  • Your income. The main criteria to get accepted for a loan is that you will have to have a large enough income to service the repayments. The higher your income, the more you will potentially be able to borrow.
  • Your credit history. One of the other conditions of being accepted for a loan is a good credit history. A bad credit history will exclude you from many loans, but there are a number of lenders who will look past your credit file and discuss the circumstances surrounding the bad marks on your credit history. This can put you in a better situation for refinancing your loan. You can also seek a credit repair service to see if any negative listings can be removed.

Understand how you ended up with bad credit

There are a number of factors that can lead to poor marks on your credit history. You may find your credit history damage if you:

  • Have unpaid bills. One of the main ways that people will get a bad credit history will be because they have unpaid bills. Make sure you keep your payments up to date and on time.
  • Have been late on payments. Late payments will also affect your credit history. While late repayments will affect the credit history they will not have as much as an effect as unpaid bills.
  • Have been declined a loan. If you have recently been declined a home loan then you may get a bad credit rating from this. Many lenders will see the decline as a sign that they found something that disqualifies you from a home loan.
  • Have applied too often. It is a general rule of thumb that you should only make an enquiry for credit once every six months/ Any more than this could raise a red flag to lenders.
  • Have been declared bankrupt. If you have been declared bankrupt then you will have a bad credit rating that will stay on your credit rating for seven years.

9 tips to apply for a home loan with bad credit and get approved

When applying for a home loan with bad credit, there are a number of things you can do to help your chances:

1. Get a copy of your credit file

Before you even apply for a home loan, you'll want to ensure that you're familiar with your credit history. All of your prospective home loan lenders will have a close look at your history before granting you a home loan, so you want to be able to discuss the negative marks on your credit file with confidence. You can get one free copy of your credit file each year. This will help keep you aware of any negative listings you might be able to fight against using a credit repair service.

2. Take steps to settle any outstanding debts

New lenders will want to know what you've done to address your past credit mishaps, so ensure that any defaults are paid and you do the right thing by your previous creditors.

3. See if a credit repair service can help you

Some bad credit listings, if placed on your file without proper adherence to the relevant laws, can be removed from your file. A credit repair specialist can help you in this regard. Removing negative listings from your credit file can help you apply for a regular home loan, avoiding the higher fees and interest rates of a bad credit home loan.

4. Apply for a loan with a specialist lender who looks beyond the numbers

Certain lenders in Australia specialise in bad credit home loans. These lenders, such as Pepper and Liberty Financial, look at your credit file and take into account that bad credit can result out of a lifestyle change, such as divorce or illness, and will take into account your income and other factors to still grant you a loan, even if you're a discharged bankrupt or have negative listings on your file.

5. Don't apply for too many loans in one space of time

Your credit file includes all previous enquiries for credit, which includes past loan applications. Be careful who you apply for a home loan with if you already have bad credit. Too many enquiries in the same space of time can present another red flag to prospective lenders, as it could indicate money management problems.

6. Tell your lender about your bad credit listings honestly

As with every lender, a non-conforming lender will look at all the red flags in your credit history. However, they will also ask for an explanation regarding each entry, and you will have to be thorough in the details you provide. If you try to hide something, you won't improve your credit rating. You will simply make the lender more suspicious. This may lead to your application being declined on the grounds that you were not being transparent enough or fully honest about your circumstances. It is possible to get a home loan with bad credit - but you will have to be open and transparent with your lender.

7. Think about Lender's Mortgage Insurance (LMI) before you apply

In Australia there are only two major LMI providers, Genworth and QBE. They have their own lending criteria which they use to evaluate your loan, which can in some cases be stricter than that of your lender, leading to your application being rejected. Some lenders don't use these insurers, meaning there's no third party risk of being rejected for a home loan because of LMI. In most cases, these lenders, such as Pepper, will have their own LMI alternative.

8. Avoid applying with a spouse with bad credit if you can

If your partner is the one with bad credit, sometimes you can avoid rejection and the higher interest rates of a bad credit loan by applying as a single applicant. This will obviously reduce your borrowing power, so consider this before applying this tip.

9. Eliminate your other debts to make your file look better

When your lender looks at your application, they'll take into account all of your current credit accounts, including credit cards and personal loans. If you can pay these off and close them before applying it'll be one less factor that will work against you when your lender decides whether to approve or reject you. This is because your lender will look at your total capacity to pay off a loan, and if you have a number of credit cards - even if they're not currently being used or maxed out - your lender could see this as a red flag.

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Case Study 1: Martha's Post-Divorce Triumph


Martha was married to her husband Travis for 30 years.

Unfortunately, they separated and later divorced over the course of two years.  During these two years, the stress of the divorce coupled with the loss of a second income when Travis moved out meant that Martha fell behind on a number of credit card payments and bills.

After the divorce and the sale of the family home, Martha wanted to purchase a small apartment for her to live in and be near her children and grandchildren.

Having a senior role at her job meant that her income was high - making her a model applicant - but her credit file showed a very different story.

Martha got a copy of her credit file, and using a credit repair service was able to remove one of the four listings from it.

She then approached a specialist lender who could see that apart from the three listings on her credit file during her divorce period, the rest of her file was spotless.

Three weeks later Martha had pre-approval for a loan and was able to purchase a comfortable apartment and resume her life again.

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Case Study 2: Peter and Mary

Couple with bad credit Peter and Mary had been paying their home off for the past 20 years. Unfortunately, Peter fell ill and had to take four months off work. For the first two months they were able to cover the home loan repayments on the amount in their redraw account and Mary's wage covering day to day expenses.

It was after this two months that the couple started to struggle. Bills were piling up and the home loan repayment was deemed more important. Numerous letters from the provider sat on the kitchen table and ended up with a debt collection agency.

It was then one of their friends informed them about the Fox Symes refinance home loan option. They enquired online and spoke to a representative the next day who was able to work out a solution for their problems.

Enquire with Fox Symes today
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107 Responses to Apply and get approved for a home loan, even with bad credit

  1. Default Gravatar
    john | August 22, 2016

    I recently got divorced and have horrible credit I want to buy a home what can I do? Tired of renting 12 years want something my kids can call home or will be theirs one day

    • Staff
      May | August 24, 2016

      Hi John,

      Thank you for your inquiry. Just to confirm though that you’ve come through to – we are a financial comparison website and general information service and we are not mortgage experts and don’t offer any of the products or services on our website.

      Some of the specialist lenders above actually accept applications from borrowers with bad credit. You may compare your options and click on the ‘Enquire’ button to head over to the lender’s website.

      Please keep in mind though that each lender has their own set of eligibility criteria and they approve applications on a case-by-case basis as they would still assess your ability to repay the mortgage.

      Meantime, you may like to check our credit repair guide to see if any negative listing can be removed from your file.

      Hope this is helpful.


  2. Default Gravatar
    | July 24, 2016

    I applied for home loan last year in April. Its approved but due to family problem we do not go further up and we dropped it. Now we are planning to go with other bank. So the enquiry of my last loan in my credit file effect this time.

    • Staff
      May | July 25, 2016

      Hi AJ,

      Thank you for your inquiry.

      Generally, any enquiry or credit application (be it a credit card, home loan or a personal loan) you have will stay on your credit file for 5 years. Most lenders would look at and check your credit file if you apply for a credit. However, please keep in mind that aside from your credit history, they would also assess other factors such as, but not limited to your income, assets, debts, etc.

      It would be best that you discuss with the lender your home loan options and your situation before submitting any application.


  3. Default Gravatar
    Mohammad | May 22, 2016

    I am from Pakistan. I need a home loan.

    • Staff
      Marc | May 23, 2016

      Hi Mohammad,
      thanks for the question.

      Unfortunately is an Australian service, so unfortunately I’m unable to help with your request. You might wish to compare Pakistani lenders to find out which options might be available to you.

      I hope this helps,

  4. Default Gravatar
    Sam | November 21, 2015

    I hve bad credit but it’s 5yrs next sept so can I apply fr home loan plZ advice

    • Staff
      Belinda | November 23, 2015

      Hi Sam,

      Thanks for your enquiry.

      As mentioned above on this page there are some specialist lenders who offer home loans to individuals with bad credit. You can compare these lenders in the above comparison table and click the ‘enquire now’ button to be redirected to their website.

      Generally the lender will treat these applications on a case-by-case basis but they will likely discuss your credit history with you and assess your serviceability potential to see whether you can comfortably commit to your mortgage repayments.

      Before applying for a home loan, you should take steps to get your credit file in order. You might be interested to read our credit repair guide to see whether any negative listings can be removed from your file.

      All the best,

  5. Default Gravatar
    Brooke | July 26, 2015

    I separated from my husband last year and we have just signed settlement and have just found a house to purchase. During the separation I was not given access to marital finances so ran up substantial debt but will be able to clear debt and still have substantial deposit for a deposit. Im also 3 years out in new career so haven’t got good work history. My dad will go guarantor on loan but am worried I wont be approved, what can I do to better my chances?

    • Staff
      Jodie | July 27, 2015

      Hi Brooke,

      Thank you for contacting, a financial comparison website.

      The lenders listed above specialise in home loans for borrowers who have negative credit marks on their credit file, however all lenders take different things into consideration when you apply for a loan so you may have more options available. It may be best to speak to a mortgage broker who can look at your personal situation and offer products that would be suitable for you and can offer advice on the loan approval process.


  6. Default Gravatar
    ann | June 30, 2015

    hi looking for a homeloan lender that give me a loan as i just clean my credit file and im only on carers payment from centrelink

    • Staff
      Belinda | July 1, 2015

      Hi Ann,

      Thanks for your enquiry.

      Please note that is an online comparison and general information service and we can’t recommend specific lenders.

      If you’re on a carer’s allowance, most banks will require that you have a secondary source of income to demonstrate that you can service the home loan.

      However, on this page you can learn more about home loans for Centrelink recipients and enquire with a mortgage broker to discuss your options.


  7. Default Gravatar
    Melissa | June 12, 2015

    Hello, I have a question, I would love to buy another home for myself and my 2 children 11 and 15 yrs old. My problem though is my work and savings history is not good at all. Living with violence, abuse, fear, flight or fright it became near impossible to function in the workplace. Survival and protection became my life. But I am very a determined woman, my children are my world, they were my reason to fight until I had got us out to start all over again to rebuild our lives. Happy and no fear is now how we are living today. So prior to the last 3 year’s I have over 20 year’s great savings and work history. My ex husband and I built 2 homes one I brought him out after separating being the soul owner. I sold my home last June. I’m a single Mum who wants nothing more than to able to provide a comfortable, simple, happy in life for me and my babies, I have $10000 a career, opportunities, financial stability only 1 1/2 yr away. I will owe my vet fee that’s paid for my study but will pay back only when I commence work earning over a certain amount. My question is do you think I might be able to apply for a home loan and be considered but ideally be approved? Thank you I appreciate your time.


    • Staff
      Belinda | June 12, 2015

      Hi Melissa,

      Thanks for your enquiry.

      There are many lenders that will accept borrowers that don’t have a good credit history, however it’s important to remember that every lender will have different eligibility and borrowing criteria for different home loans.

      On this page, you’ll find some advice about how to get approved for a home loan with bad credit history, as well as a list of lenders that are likely to consider your application for a home loan.

      All the best,

  8. Default Gravatar
    Boy | June 11, 2015

    Hi I’ve apply a loan but I’ve not yet get feedback can I get clarification?

    • Staff
      Belinda | June 12, 2015

      Hi Boy,

      Thanks for your enquiry.

      You’ve come through to which is an online comparison website. You’ll need to contact the lender directly to follow up with your application.

      Kind regards,

  9. Default Gravatar
    Mrsh | June 4, 2015

    I have a 12000 credit with common bank about 8 years ago. Unfortunately I couldn’t pay off that yet.
    How can I pay it off?
    Can I pay monthly or weekly?

    • Staff
      Belinda | June 5, 2015

      Hi Mrsh,

      Thanks for your enquiry. is an online comparison service so we do not represent the Commonwealth Bank or their products.

      To discuss your payment frequency for this loan, you’ll need to contact Commonwealth Bank directly.


  10. Default Gravatar
    chinni | May 12, 2015


    I have an annual income of $48000 with clear credit. My husband’s income is $67000 with bad credit due to $15000 credit card.Now we want to purchase a property can I add my husband to application. As he has more income which would give us more chances of amount to borrow.

    • Staff
      Belinda | May 28, 2015

      Hi Chinni,

      Thanks for your enquiry.

      Depending on the lender, it may be possible for you to open a joint account with your husband.

      Find out about the eligibility for bad credit home loans and a list of brokers that offer these products on this page.


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