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Bad Credit Home Loans

Compare Australian lenders who can help bad credit borrowers get home loans.

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Getting a home loan is tougher when you have bad credit. Here's what you need to do to find the right loan and increase your chances of getting approved.

What is a bad credit home loan?

At their core, bad credit home loans are similar to regular home loans: you save a deposit, borrow an amount of money, then pay it back with interest. But because you have poor credit the loan will be a little more restricted or have higher fees and charges.

A typical bad credit home loan has:

Compare your bad credit loan options

Data updated regularly
Name Product Interest Rate (p.a.) Comp. Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Pepper Money Easy Near Prime Full Doc Home Loan
$15 monthly ($180 p.a.)
Enjoy extra repayments with no penalties and a rate reduction if you make your payments on time for 12 months.
Pepper Money Essential Prime Full Doc Home Loan
$10 monthly ($120 p.a.)
A low rate home loan which rewards those with a larger deposit.
Pepper Money Essential Prime Full Doc Home Loan
$10 monthly ($120 p.a.)
A variable rate loan for borrowers with a good credit history. This loan has a 100% offset account plus split and redraw facilities.

Compare up to 4 providers

Understand how you ended up with bad credit

Start by understanding the causes behind your credit problems. You may find your credit history damaged if you:

  • Have unpaid bills. Make sure you keep your payments up to date and on time.
  • 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.
  • Made late payments. Late payments will also affect your credit history but they will not have as much of an effect as unpaid bills.
  • 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.

Learn more about home loans for discharged bankrupts

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

All of your prospective home loan lenders will have a close look at your credit 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.

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.

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, 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. Just keep in mind that applying solo will reduce your borrowing capacity.

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.

Can I get a mortgage if I've been bankrupt?

You may be able to get a loan if you're a discharged bankrupt. You can apply for a mortgage from the first day your bankruptcy ends, although keep in mind that your bankruptcy remains on your credit report for 5 years from the start of your bankruptcy, or 2 years after your bankruptcy ends (whichever is later).

Unfortunately, your credit file doesn't list the reasons behind your bankruptcy, meaning you could find it very difficult to get any sort of home loan even once you're discharged. Because these listings stay on your credit file for seven years, this can put your dreams of owning a home on hold.

That's why finding a specialist lender is a really good idea. Some Australian lenders specialising in lending to people with troubled credit histories include:

  • Pepper Money
  • Savvy
  • Red Rock Mortgages
  • Liberty

How mortgage brokers can help you find a bad credit home loan

Mortgage brokers are qualified experts who can help you find a mortgage. They specialise in helping borrowers in unique circumstances who have difficulty qualifying for regular home loans. This includes borrowers with bad credit histories. Brokers can help you find lenders for your situation and help you organise your application to maximise your chances of approval.

A broker's service is usually free because they receive a commission from your lender, not from you.

Compare mortgage brokers

Details Features
Aussie Home Loans
Aussie Home Loans
Aussie is one of Australia's leading financial service providers, having won The Adviser’s Top Mortgage Broker award for the last 3 years. They charge no appointment fees and can meet at a time and place which suits you.
Up to 22 lenders Enquire Now More info
eChoice Mortgage Brokers
eChoice Mortgage Brokers
When you do business with eChoice you will be given your own home loan manager to help you select a loan. 25 lenders Enquire Now More info

Learn more about how mortgage brokers can help you

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28 Responses

    Default Gravatar
    LukeFebruary 26, 2019

    I’ve always had a great credit rating and brought my first home at the age of 20 my ex partner after 15 yrs net banked 30k off my home loan and left me with a 11k rates bill that she defrauded me on to the point I had to declare bankruptcy I’m just about to finish my 3 yr period and have a permanent employment and would love to be able 1 day to own my own home again is it possible and if so how hard would it be for me

      Default Gravatar
      NikkiFebruary 27, 2019

      Hi Luke,

      Thanks for getting in touch with Finder. I’m sorry to hear about your current situation. There are loan options you can go for and our guide to refinancing after bankruptcy will jumpstart your search. As a friendly reminder, review the eligibility criteria of the loan before applying to increase your chances of approval. Read up on the terms and conditions and product disclosure statement and contact the bank should you need any clarifications about the policy.


    Default Gravatar
    HarryNovember 11, 2018

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

      Avatarfinder 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!


    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.

      Avatarfinder 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.


    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.

      Avatarfinder Customer Care
      MaySeptember 29, 2016Staff

      Hi Emma,

      Thank you for your question.

      Different countries have independent credit files and reporting systems. 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 read more invaluable information on our 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. They will consider as well all the other financial circumstances you have.


    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,

      Thanks for your comment.

      Each lender has different criteria that they allow when they lend funds. Lenders would generally assess your income, assets, liabilities, debts and credit rating. Your agreement appears on your credit report for 5 years from the start date of your agreement. This can sometimes be longer and may affect your ability to obtain credit.

      I recommend getting in touch with a licensed mortgage broker. A broker can help you understand your financial position and they can leverage their panel of networks to find a lender that’s more inclined to review your application.

      I hope this helps.


    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.

      Default Gravatar
      BelindaAugust 27, 2015

      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.


    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

      Default Gravatar
      BelindaAugust 10, 2015

      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 and also compare a range of lenders that offer home loans that may be suited for refinancers.

      If you are 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 and compare refinancing home loans.

      I also recommend getting in touch with a licensed mortgage broker. A broker can help you understand your financial position and they can leverage their panel of networks to find a lender that’s more inclined to review your application.


      Default Gravatar
      IdaAugust 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?

      Default Gravatar
      BelindaAugust 11, 2015

      Hi again Ida,

      I’ve sent you an email regarding this enquiry.


    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.


    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.


      Avatarfinder Customer Care
      ShirleyFebruary 10, 2015Staff

      Hi Michelle,

      Thanks for your question.

      You may want to try the smaller mortgage brokers in our panel, to see if they have any agreement with specialist lenders.

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

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you.

      I hope this helps,

    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?

      Avatarfinder 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,

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