Different Types of Bad Credit Home Loans

By Angela Monroe - December 7, 2018

Different Types of Bad Credit Home Loans

If you have bad credit, you’re often made to feel as though your options are limited and you’re unlikely to get a home loan. At Loans for People With Bad Credit, we want to reassure you that there are in fact a number of different types of bad credit home loans which you can choose from – to help make your home owning dream a reality.

Understanding a bit about the different bad credit home loans that are on offer will help you to decide which one could be right for you and your financial situation. Remember, if you’re overwhelmed by the information or simply don’t feel confident making a decision yourself, Loans for People With Bad Credit can help you through the process.

Getting a Bad Credit Home Loan

Always make sure that you’re in the best situation possible when applying for a bad credit home loan. We understand that it’s often a matter of urgency and it’s true that you can’t change your credit rating overnight but it’ll help to take some of the steps below:

  • Try and apply for a bad credit home loan when you have proof of a regular income
  • Get pre approval for a bad credit home loan so you know where you stand financially and how much you can expect to borrow.
  • Avoid making numerous applications for credit – this will ring alarm bells to lenders.
  • If you can save for a deposit, you may help your chances of getting a bad credit home loan
  • Get organised – have all your documents ready for your potential lender
  • Make repayments on time and in full to prevent any further damage to your credit score.

Types of bad credit home loan

  • · First Home Buyer’s Loan Often the reason that people need a bad credit home loan is simply because they haven’t yet built up enough of a credit rating to show to a lender. This happens regularly with first home buyer’s so luckily there are numerous options when it comes to finding a first home buyer’s loan. There are ways that you can improve your chances of getting a first home buyer’s loan. If you have any sort of deposit, this will help to assure the lender that you have savings and can reduce the overall amount that you may need to borrow. Many first home buyer’s often depend on a relative (usually parents) to help with a deposit or to act as a guarantor on their first home buyer’s loan. If you do decide to take this step, remember that it’s absolutely essential the other party is happy about being involved in the loan and is willing to take on the financial responsibility if you’re unable to pay the loan back.
  • Refinancing Home Loan:If you have bad credit, you may be trying your best to get back on track financially by looking at all your current outgoings and expenses and figuring out how you can save. You may be lucky enough to already have a home loan in which case refinancing your home loan if you have bad credit could help you to get a better deal. Often interest rates for people with bad credit are much higher than for those who are taking out loans with a good credit history. A refinancing home loan can get you better interest rates, fees and loan terms meaning that your repayments will go down and you may increase the time you have to pay back the loan.
  • Investment Property Loan:  Getting an investment property can be an excellent way to make money – you can earn an income from rental paid on your investment property and it’ll help to increase your credit history by showing that you are paying back an investment property loan on time and in full. Be careful not to stretch yourself financially though – focus on what you need to financially survive day to day before you think about investments. It’s really important that you don’t borrow more than you can pay back so take the time to budget carefully and weigh up your short and long term needs. Just because you have bad credit, you shouldn’t be excluded from the investment property market so if it’s the right option for you, go for it!
  • Debt Consolidation Loan: If your bad credit is a result of mismanagement of multiple loans which you easily lose track of, you might consider getting a debt consolidation loan. A debt consolidation loan will let you consolidate all of your debts into one loan with a single monthly repayment.

Always ask for help from Loans for People With Bad Credit before you commit to a debt consolidation loan though – you need to be careful about consolidating short term loans such as credit cards or car loans with a home loan as you’ll be paying the same rate of interest and having the same loan term for all of them. Do the sums and figure out what the best option is for you.

Speak to the experts

If you’re looking for bad credit home loans, speak to Loans for People With Bad Credit to get instant access to a wide range of lenders who specialise in helping people with bad credit. We’ve got years of experience and want to help you find the best bad credit home loan for you.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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