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

If you have paid or unpaid defaults or even discharged bankrupts on your credit file, home loans may still be available.

Compare your bad credit loan options

Rates last updated November 13th, 2018
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
$15 monthly ($180 p.a.)
Available for former bad credit borrowers who have had a clean credit file for the last 24 months. Available for purchase or refinance.
$15 monthly ($180 p.a.)
An online bad credit home loan for those who may have had some bad marks on their credit history.
$15 monthly ($180 p.a.)
Available for borrowers with bad credit history. Can be used for purchase or refinance even with negative listings on your credit file.
$15 monthly ($180 p.a.)
A loan designed for those who have negative marks on their credit file.

Compare up to 4 providers

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 damaged 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 but they will not have as much of an effect as unpaid bills.
  • Have been declined for a loan. If you have recently been declined a home loan this will be recorded on your credit file. Many lenders will see this as a sign of impaired credit.
  • Have applied for credit 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 borrowers can do to help their 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 who has 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.

Speak to a mortgage broker and get expert home loan help

Bad credit case studies

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.

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.

Home Loan Offers

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comp rate of 3.66% p.a.

Tic:Toc Live in Loan Variable Rate - Principal & Interest

Get a very low interest rate and avoid big fees. Apply online for full approval in under 30 minutes and add a 100% offset account for $10 a month.

HSBC Home Value Loan - (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.

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26 Responses

  1. Default Gravatar
    HarryNovember 11, 2018

    Hi! When applying for a mortgage in AU would a lender check an NZ credit file? Thanks

    • finder Customer Care
      JohnNovember 12, 2018Staff

      Hi Harry,

      Thank you for leaving a question.

      Yes, an AU lender may have visibility to your NZ credit file when you apply and may also use this as consideration when approving your mortgage. You may check with the lender as well since this may be a case to case basis. Hope this helps!


  2. Default Gravatar
    DeeOctober 3, 2016

    I don’t have bad credit but I am on the aged pension. I want to borrow $130,000 which will get me into a retirement village. This $130,000 is basically rent in advance. Will the fact that I am 68 yrs old be held against me. I have money in a long term investment account but don’t want to use this as it is to be used for incidental expenses that arise. Would a mortgage broker be of any help, as I imagine the banks won’t.

    • finder Customer Care
      JenniferOctober 24, 2016Staff

      Hi Dee,

      Thank you for contacting we are a financial comparison website and general information service and therefore can only offer general advice and information.

      I understand your situation and it is true that people who rely on pension are less likely to get a non-conforming home loan. You may check our page here about home loans for pensiors Alternatively there are specific loans that are suited to your needs in regards to getting the funds for mocing into a retirement village called reverse mortgage’s you may like to look into. You may talk to a broker to assess and help you on your home loan needs. Here is the link

      Hope this helps.


  3. Default Gravatar
    EmmaSeptember 28, 2016

    We have been living in Australia for 4yrs. We have excellent credit score here. However, I have a NAP in NZ which I entered into just over a year ago and was discharged from a few weeks ago.
    I have been given varying information regarding the status of the NAP in Australia; some say it is considered to be a part ix other say it’s not.
    We would like to buy a home next year ….. is my NZ credit history relevant here ? I know of a few people who have bought homes here with bad credit overseas.

    • finder Customer Care
      MaySeptember 29, 2016Staff

      Hi Emma,

      Thank you for your question.

      Different countries have an independent credit file and reporting so, your credit file report in Australia is not influenced by your credit history in NZ. Furthermore, credit histories don’t transfer between countries. Please feel free to visit this page to find invaluable information on credit file FAQs.

      Now, if you’re planning on buying a property in Australia, lenders would generally assess your income, assets, liabilities, debts and credit rating. The credit history you created in Australia will be reviewed by the lender – the better rating you get, the more you have chances of getting approved, considering as well of all the other financial circumstances you have.


  4. Default Gravatar
    MandyDecember 22, 2015

    hi im in section 9 debt agreementim looking at purchasing a block of land.I have a deposit which is half the value of land .Would this put me in a better position to borrow other half money to purchase the land

    • Default Gravatar
      JodieDecember 23, 2015

      Hi Mandy,

      Thank you for contacting a financial comparison website and general information service.

      Each lender has differing criteria that they allow when they lend funds it would be best to contact one of the lenders on this page or a mortgage broker to discuss your circumstances and they can offer you advice on which lender and loan will work for your needs.


  5. Default Gravatar
    SusanAugust 26, 2015

    I owe $195,000 on my home.
    The last valuation in 2014 was for $385,000.
    I defaulted on my payments, due to a down turn in my business. I am a sole trader in real estate and am subject to market forces in a rural area.
    The home loan lender took out a judgement against me in July/August last year.
    I paid all arrears owed in August last year and have kept all payments up to date ever since. I do not have any arrears.
    I do have a bad credit rating.
    I want to look at the realistic possibility of refinancing my home, given the equity.
    However, I do not want to waste time if, given there is both a judgement on my home and a bad credit rating, there is no possiblity of refinancing the present loan.

    • finder Customer Care
      BelindaAugust 27, 2015Staff

      Hi Susan,

      Thanks for your enquiry.

      There are still options available for individuals looking to refinance that have a poor credit rating, however you must realise that each lender will treat this on a case-by-case basis and they’ll each have their own eligibility criteria.

      You might be interested to read our review about refinancing your mortgage with bad credit on this page, and can fill out the form to speak with a specialist lender.

      In addition, you can learn about the costs of refinancing your home loan here. Please keep in mind that you’ll likely need to pay any exit or early discharge fees with your existing lender and you may also incur application and start-up fees with your new lender.

      It’s important that you weigh up these costs to consider whether refinancing is the best option for you.


  6. Default Gravatar
    IdaAugust 8, 2015

    I have a property investment – loan with a bank, I have asked for hardship help, which the bank has approved, do not have to pay for 3 months. I have asked them to refinance the loan for 10 years, it would lower the repayments 50%, they didn’t accept, before I am behind with the payments. I try to explain it would be better and I would be able to stick to the regular monthly repayment. The could not see that!! My question is can I refinance the loan with some other lender? I only need to borrow 20% from the value of my investment property, which I am renting out. Which lenders should I approach? If you could help, thank you

    • finder Customer Care
      BelindaAugust 10, 2015Staff

      Hi Ida,

      Thanks for your enquiry.

      It may be possible for you to refinance with another lender and you can read about refinancing your mortgage on this page and also compare a range of lenders that offer home loans that may be suited for refinancers.

      If you’re thinking of switching to another lender, ensure that you take into account any break or early termination fees that may be charged by your existing lender.

      In addition, you can estimate the cost of refinancing on this page and this page.


    • Default Gravatar
      August 10, 2015

      Hi Belinda
      Thanks for your reply. I have one more question. I would like to try the lease doc loan. Is it safe? Also at the moment I have commercial lease agreement, but it is not registered. Do I have to register the lease and how can I do it?

    • finder Customer Care
      BelindaAugust 11, 2015Staff

      Hi again Ida,

      I’ve sent you an email regarding this enquiry.


  7. Default Gravatar
    ScottJuly 13, 2015

    Hi I have about 30 grand in debt . have applied for loans to consolidate my debt. I earn good money a week . can someone help me with a house.

    • Default Gravatar
      JodieJuly 14, 2015

      Hi Scott,

      Thank you for your comment on, a financial comparison website.

      I’d recommend contacting a home loan lender or mortgage broker which specialises in credit-impaired borrowers. These include lenders such as Pepper Home Loans, Liberty Home Loans, Bluesky, and more. There are links to their pages or enquire forms in the above table on this page that allows you to contact them.

      You can also try to contact regular lenders and explain your credit situation to them before making an application. This way you can explain how you ended up with a negative credit history, and the steps you’ve taken to remedy this.


  8. Default Gravatar
    michelleFebruary 10, 2015


    When looking to use non-conforming lenders to get a debt consolidation mortgage, is it best to contact the banking institution directly or use a broker?

    The brokers I have approached tend to stick to the major banks only.


    • finder Customer Care
      ShirleyFebruary 10, 2015Staff

      Hi Michelle,

      Thanks for your question.

      You may want to try the smaller mortgage brokers in our panel such as Choice home loans and 1300 home loans, to see if they have any agreements with specialist lenders.

      If they still stick with the major banks, then you may want to consider approaching the non-confirming lenders in person.

      I hope this helps,

  9. Default Gravatar
    KatJanuary 2, 2015

    So I have 10 grand and bad credit! But I want to go for a first home loan what’s the best thing to do?

    • finder Customer Care
      MarcJanuary 5, 2015Staff

      Hi Kat,
      thanks for the question.

      I’d recommend contacting a home loan lender or mortgage broker which specialises in credit impaired borrowers. These include lenders such as Pepper Home Loans, Liberty Home Loans, Bluesky, and more. You can also try to contact regular lenders and explain your credit situation to them before making an application. This way you can explain how you ended up with a negative credit history, and the steps you’ve taken to remedy this.

      I hope this helps,

  10. Default Gravatar
    PETERJuly 24, 2014

    could someone be able to call me back to discus the kind of loan that im trying to get
    I have a house to sell only we are going to have be a little sort on the place that we have bought only that is in a retirement village with a 99 year less


    • finder Customer Care
      ShirleyJuly 25, 2014Staff

      Hi Peter,

      Thanks for your question.

      Unfortunately is an online comparison service, we don’t offer personal advice regarding home loans.

      Please speak to a mortgage broker, they are home loan experts who can help you find the best loan for your situation.


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