Purchasing a home is the most significant investment that the majority of people will make in their lifetime. At the moment in Perth, entering the housing market is incredibly appealing as we are experiencing the lowest interest rate levels that have been seen in years. At the same time however, banks and financial lenders are cracking down on loan approvals due to the overall levels of debt in Australia. So for those of us who currently have debt or who have experienced it in the past, how do we get on the property ladder?
Banks and financial lenders will look at an individual’s credit history when deciding whether they will get approved for a home loan or not. The higher the level of debt, the more likely it is that the person in question will be seen as a financial risk and banks will either deny the loan request or charge the individual higher interest rates. It is not impossible though for a budding homeowner with bad credit to get into a home of their own. We outline three methods that can help people with bad credit onto the property ladder below.
1. Manage existing debt
When your lender looks at your home loan application, they will take into account all of your current credit accounts including credit cards and personal loans and raise a red risk flag against you. If you can settle existing debts before applying for a home loan it will be one less factor that will be working against you.
If you have had bad credit in the past, it can go a long way to getting your home loan application approved if you can demonstrate that you have improved your financial situation. Bring documentation with you to your loan meeting that can show that you are meeting all financial commitments on time.
2. Look at specialist lenders
When most banks are evaluating your financial circumstances, they will think of you as a colour. Red flags that you are a risk, orange indicates that you could be a potential risk and green they see you as good to go. For this reason it is worth looking into specialist home loan lenders that put more time and energy into evaluating your ability to repay your mortgage on factors other than the numbers in your bad credit report.
In Perth there are lenders who will see you as a person and delve into the reasons behind the numbers in your report, whether bad credit is the result of divorce, illness or other lifestyle factors will all be taken into account before a final assessment is made.
3. Seek professional advice
There are various service providers that specialize in managing bad credit reports. If you don’t know how to get on track with managing your existing debt levels, these services can also help you out there. Before soliciting specialist help make sure you do some research on providers to ensure that their fees are reasonable and that their abilities to improve a credit report have been justified by previous customers with bad debt.
Have you been struggling to get into a home of your own because of financial difficulties or bad credit? At No Savings our goal is to open the door to home ownership for as many West Australians as we can. We specialise in helping first home buyers who have had trouble obtaining finance before with our no deposit home loan options. Contact us today and see if you qualify.