How to get a guaranteed bad credit home loan approval?

By Angela Monroe - June 6, 2018

Suffering from a poor credit profile can severely limit your credit options. If you currently have a bad credit rating, it can be difficult for you to secure a guaranteed home loan approval. However, with specialist advice you can secure a bad credit home loan.

While most lenders won’t offer you a guaranteed home loan approval on bad credit, they will offer you a loan provided that you meet certain criteria.

Lenders will take a close look at your financial situation before they offer you a bad credit home loan. These measures are necessary to ensure that unsuitable finance does not overburden applicants who already suffer from bad credit.

To increase your chances of approval, you should approach the right lenders with a strong loan application. Mortgage brokers can help you understand just what lenders look for in a loan application before approval.

Let’s take a look at how you can get a home loan with a bad credit score.

Can you even get approval?

Let’s be honest – getting a guaranteed home loan approval with bad credit is extremely difficult, and you shouldn’t bank on it. However, it is possible for you to get approval for a bad credit home loan.

There’s no doubt that big lenders and banks won’t consider your application. However, certain lenders will consider your application provided that you build up a strong case.

To start with this, identify and focus on your financial strengths. These can include your residential history, your income or your employment history. Mortgage brokers can help you identify your financial strengths and find matching home finance options.

How to increase your chances of getting a home loan?

There are certain things you can do to increase your chances of getting a home loan on bad credit. These include:

Know your credit score before approaching lenders

It is vital to know your credit score before you approach lenders for a home loan. Typically, at credit scores above 620, you should be able to get a home loan without too many problems. However, if your credit score is below this, you will need to approach the right lenders.

Research across different lenders to find the best deal

The interest rates and terms and conditions of bad credit home loans vary from one lender to another. To find the best deal, you should research across different lenders. Never jump into accepting the first offer that comes your way.

Save money to pay off existing debt

One of the easiest ways to improve your chances of getting a home loan is by improving your credit score. You can do this by paying off your existing debt and by managing your finances more responsibly.

Find a cosigner

To strengthen your loan application, you can also consider finding a cosigner or offering collateral. Look for a cosigner who has a good credit score and a good credit history and most lenders will look at your loan application favourably.

What lenders look for when considering a bad credit home loan

When you approach lenders for a bad credit home loan, they will closely consider your financial situation. Your credit score and credit history will be the first things they will look. After this, they will also consider your debt to income ratio.

While lenders may be lenient with credit score requirements, they will not compromise with debt to income ratio. A high debt to income ratio will indicate to lenders that you have too many existing debts to pay off. They will be wary of considering your loan application, even if you show that you are stable financially.

It is a good idea to determine your debt to income ratio before you approach lenders for a home loan. Keep your debt to income ratio below 40 per cent and lenders will consider your loan application favourably.

To fully understand what lenders will consider in your loan application, you need the help of professional consultants. Professional finance consultants who specialise in bad credit home loans such as Loans for People with Bad Credit can help you out.

How to improve your credit score in the long run

Whether you suffer from bad credit or not, it is always wise to improve your credit score. Improving your credit score will open up your credit options and will allow you to gain control over your financial life.

To improve your credit score in the long run:

  • Pay all your bills on time and never miss a payment
  • Keep balances low on your credit cards
  • Don’t apply for new credit unnecessarily
  • Pay off existing debt
  • Don’t close off unused accounts
  • Check your credit report for inaccuracies
  • Maintain a strong financial record

Getting bad credit home loan approval

Securing a guaranteed home loan approval on bad credit can be very difficult. However, you can certainly secure a bad credit home loan. All you need to do is to prepare a strong loan application and approach the right lender for your needs.

Loans for People with Bad Credit is your best choice for bad credit home loans. Our mortgage brokers can help you prepare a strong loan application and present the best case to lenders. With us around, you can certainly increase your chances of loan approval.

To talk to one of our professional financial consultants, get in touch with us today!

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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