If you’re having trouble qualifying for a loan due to credit impairment, consider the specialist bad credit home loans offered by State Custodians.
State Custodians offers alternative home loans to Australian borrowers who may not fulfil traditional lending criteria. With over $1 billion in home loans to date, State Custodian’s loans are funded via Resimac Limited, which is a 30-year industry veteran.
If you’re experiencing difficulty applying for a home loan due to a bad credit history, late payments or the need to consolidate a large number of debts, State Custodians may be able to help.
With flexible terms and features for credit impaired borrowers, State Custodians offers financing solutions for those with unpaid defaults, discharged bankrupts, borrowers seeking to repay tax debt, the unemployed and others.
What is a bad credit home loan?
Australian lenders typically examine your credit history and profile when reviewing your application for a home loan, as this largely determines the level of risk that you present to the lender. If you have a poor credit history, your chance of qualifying for a conventional home loan is restricted. If you have a poor credit rating, you'll need to apply for a bad credit home loan with a specialist lender, such as State Custodians.
A bad credit loan is a home loan offered by a lender with more lenient criteria compared to a traditional lender. Generally, bad credit loans provide credit-impaired borrowers with an opportunity to access finance despite their bad credit status. When reviewing an application for a bad credit loan, the lender will take into consideration the negative credit file of the non-conforming borrower, yet still provide more flexible terms and features.
How can a credit file default impact my application?
A default is a credit related infringement listed on your credit file, such as a bankruptcy order within the last seven years or a payment default over $100 that is 60 days or more overdue. This information can be accessed by a lender when they review your home loan application, and it could negatively impact your chance of being approved for a home loan.
An unpaid default on your credit file will raise alarm bells with lenders, so you should take steps to improve your chance of being approved by;
- Providing a letter of explanation outlining the reason for the default (e.g. business failure, illness, unemployment).
- Saving at least 20% deposit to avoid paying Lender’s Mortgage Insurance (LMI) and to demonstrate your financial discipline.
- Repaying any outstanding debt as soon as possible- this may involve contacting providers to organise a payment plan to ensure that you are paying your bills in full and on time.
What is discharged bankruptcy?
Discharged bankruptcy means you’ve been released from bankruptcy status, but a past bankruptcy can still be detrimental to your credit file. As most lenders consider discharged bankrupts as high-risk borrowers, you should attempt to improve your chances of being approved by demonstrating that you have a strong employment record or repayment history.
Consolidating debt occurs when you combine all of your debts into one so that you have one monthly repayment, instead of several. Debt consolidation makes budgeting easier as you only have one monthly repayment to manage. t can allow you to save on interest if you source a competitive rate, and you can also reduce fees and charges by only having to deal with one loan.
How do I know if I should consolidate my debt?
While each situation is different, there are several warning signs that may indicate that you should consolidate your debts. For instance, if you’re unable to meet your existing repayments, you can only meet minimum monthly repayments, you’re borrowing funds to repay your expenses or you can’t keep tabs on how much money you owe, then you may want to consider rolling all of your debts into one.
If you’d like to consolidate your debt into a home loan, you’ll generally need to have existing equity. Speak with a mortgage broker to consider whether or not this is a viable option for you.
What kind of borrowers or situations are bad credit home loans suited to?
State Custodians bad credit home loans are suited to borrowers who have made late repayments, who may be in mortgage arrears, defaults or a large amount of outstanding debt. State Custodians recognises that the following situations may put your finances in jeopardy and subsequently, State Custodians has helped borrowers due to the following situations;
- Unemployment: State Custodians understands that a loss of employment can significantly harm your ability to meet your repayments and other outstanding debts. It takes this into consideration when reviewing your application.
- Business failure: If your cash flow is unmanageable or you’ve filed for voluntary bankruptcy, State Custodians can provide you with credit to manage your finances.
- Divorce or separation: A change of marital status can hinder a borrower’s capacity to service a mortgage or personal debts.
- Personal debts: State Custodians can help borrowers who are behind with outstanding personal debts.
- Illness: A severe illness within the family can cause financial distress and this is another factor that State Custodians considers when reviewing your application.
- Adverse credit: This may include a borrower who has or experienced defaults, discharged bankruptcy, a large number of credit enquiries, unpaid bills, or mortgage arrears.
What home loans do State Custodians offer for borrowers with bad credit?
State Custodians currently offers the Bad Credit Specialist Home Loan which is suited for both owner occupiers and investors alike. With competitive and flexible features such as a split loan facility, a 100% offset account and an online redraw, the loan enables borrowers with bad credit to get their finances back on track.
What are the features of a State Custodian bad credit home loan?
State Custodians offers bad credit borrowers with flexible terms and features, including;
- Loan Amount. State Custodians allow bad credit borrowers to borrow from $100,000 up to $2.5 million.
- Maximum loan term: If you apply for a State Custodians bad credit loan, you have a maximum term of 40 years to repay your debt.
- Maximum LVR: With a bad credit home loan, you can borrow up to 90% of the property value (including risk free).
- Repayment frequency: Choose from a weekly, fortnightly or monthly repayment schedule to suit your income stream.
- Additional repayments: You can make extra repayments without incurring an additional cost.
- Split loan facility: You can split your loan in up to 6 portions.
- Offset account: With a State Custodians bad credit loan, you can benefit from a 100% offset account which can help to reduce the amount of interest payable over the life of your loan.
- Flexible terms: Bad credit loans offered by State Custodians enable you to consolidate large amounts of debt, borrow to pay out any tax liabilities that you may have as well as allow you to borrow even with unpaid defaults or late payments.
- Interest rate: The interest rate that applies to your loan will depend on how much you borrow relative to the value of the property as well as the level of credit impairment.
What criteria do I have to meet to qualify for a State Custodian bad credit loan?
State Custodians treats the applications of bad credit borrowers on a case-by-case basis but generally you’ll need to provide that despite your bad credit status, you can afford to meet your repayments.
You may need to provide the following;
- Two recent pay slips and a payment summary.
- One month transaction history statements.
Are there any debts that are forgiven?
As a specialist lender, State Custodians understands that situations may arise where you’re unable to control your finances. The following debts are some of which may be overlooked by State Custodians during the application process;
- Defaults less than $2,000
- Defaults listed or paid more than two years ago
- Bankruptcy discharged two or more years ago
- Discharges of Part 9 or 10 debt agreements
How can I apply for a State Custodian bad credit home loan?
If you think a bad credit loan with State Custodians is right for you, you can click on the "Enquire Now" button to be safely redirected to the State Custodian website where you can access more information and enquire with a State Custodians lending specialist.