If you’re struggling to qualify for a mortgage because of your poor credit history, a bad credit home loan from Liberty could help you access the funds you need.
If your credit file has one or more black marks, finding a lender that’s willing to offer you a home loan can be difficult. A poor credit history usually places you in the “high-risk” category, and many lenders will be reluctant to let you borrow money as a result.
But there are some home loan providers that specialise in offering finance to borrowers with bad credit, including Liberty. Established in 1997, Liberty offers flexible financial solutions to borrowers who may not satisfy the traditional lending criteria of the major banks.
To date, Liberty has helped more than 140,000 customers and loaned more than $12 billion in funds. It offers a wide range of home, car and business loans to suit the varied needs of Australian borrowers, including home loans for customers with bad credit.
How can a poor credit history affect my home loan application?
Before a bank or any other provider will lend you money, they need to be sure of your ability to repay the loan. In order to determine your repayment capacity, the lender will look at your income, future earning capacity, assets and liabilities.
A lender will also look at your credit file. Your credit file contains a range of important information about your financial history and can help a lender decide how responsible you are when it comes to managing your money. Some of the details included in your credit file are:
- Records of credit applications you have made
- Any credit accounts which you currently have open, including credit cards, car loans, personal loans and home loans
- Any personal or business accounts which are late or overdue
- Information about past bankruptcy
- Court writs and judgements
This information stays in your credit file for at least five years – if you file for bankruptcy it will be recorded for seven years – and has a huge impact on your ability to access credit. If you have any black marks in your credit file, lenders may classify you as a high-risk borrower, which can make it difficult to get approved for a home loan.
What is a bad credit home loan?
A bad credit home loan is designed to offer home financing to borrowers with bad credit history, such as defaults, court judgements and even discharged bankruptcy. These loans are typically offered by specialist lenders, commonly referred to as non-conforming lenders.
The main benefit of bad credit home loans is that they allow all types of borrowers to access home financing. So even if you made a mistake with your finances in the past, you can still get the funds you need to buy your dream home.
On the downside, lenders include a range of features in bad credit home loans to cover the increased level of risk they are taking on by lending you money. These can include higher interest rates, higher fees and restrictions on specific loan features.
What home loans does Liberty offer for borrowers with bad credit?
Liberty offers a range of bad credit home loans to suit borrowers with less-than-perfect credit histories. Available on amounts of up to $1.5 million, these loans can be used to buy a new home, consolidate existing debt, pay out ATO debt and even to take care of a mortgage that is in arrears.
Liberty offers bad credit home loans for owner-occupiers and investment borrowers. These loans suit borrowers who:
- Are struggling to manage their existing debt
- Have paid or unpaid defaults on their credit file
- Have a mortgage in arrears
- Are past bankrupts
What are the features of a Liberty bad credit home loan?
- Loan amount. Liberty bad credit home loans are available for loan amounts of between $30,000 and $1.5 million.
- Maximum loan-to-value ratio (LVR). These loans allow you to borrow up to 95% of the purchase price of the property.
- Repayment options. You can make weekly, fortnightly or monthly repayments towards a Liberty bad credit home loan. There are also principal and interest or interest-only payment options available.
- Additional repayments. You can make additional loan repayments ahead of schedule without incurring any penalties.
- Redraw facility. Liberty bad credit loans feature a redraw facility that allows you to access your additional repayments if you ever need extra funds. However, a redraw fee of $50 applies.
- Loan split. The loan can be split to allow you to take advantage of different interest rates and features.
- Types of borrowers. Liberty offers bad credit home loans to owner-occupiers and investors.
Fees of Liberty bad credit home loans
- Settlement fee: $0. There is no settlement fee attached to a Liberty bad credit home loan.
- Application fee: $995. The application fee covers the administrative costs associated with setting up your loan.
- Valuation fee: $330. This fee covers the cost of having your property professionally valued during the lending process.
- Equalisation fee: Starting from 0.5%. This fee is designed to cover the lender’s risk.
- Monthly fee: $15. Liberty’s bad credit home loans attract an ongoing monthly service fee.
- Redraw fee: $50. The redraw fee applies whenever you want to access the additional funds you have paid towards your loan.
- Discharge fee: $395. This fee is charged when you have paid off your loan.
How can I apply for a Liberty bad credit home loan?
If you think a Liberty bad credit home loan suits for your needs, click on one of the “Find out more” links on this page to be securely redirected to the Liberty website. Once there, you can read up on the features of these loans and also request an interest rate estimate. To do this you will need to fill out a form with:
- Your name and contact details
- The amount you want to borrow
- The property value
- The purpose of the loan
- The location of the property
- Details of your debt
- Information about your credit history
- Details of your income and employment
- Information about any assets you own, for example shares or savings
- Information about your liabilities
If your credit history is less than perfect or if you’re having trouble managing existing debt, you can consider a bad credit home loan from Liberty. Compare Liberty’s bad credit loan features with loans from other providers to find a financing solution to suit your needs.