Bad Credit Home Loans

These loans are specifically tailored to help people with credit issues, such as late payments, defaults, judgments, or bankruptcies, to still qualify for a home loan.


This page is dedicated to Australians facing the challenge of obtaining a home loan due to their existing bad credit history.

Defining ‘Bad Credit’:

Have you encountered instances where you missed payments on bills, credit cards, mortgages, or other debts in the past? Credit providers, including lenders, take notice of such missed payments and categorize them as ‘bad credit.’ However, having bad credit doesn’t necessarily mean the end of your homeownership aspirations. The following factors are typically considered when assessing bad credit:

  • Bad Credit History: Adverse listings like defaults, bankruptcy, judgments, court writs, or excessive credit inquiries can raise concerns but may not automatically disqualify you from securing a home loan.

  • Lender Credit History: While your past credit history with a specific lender may be taken into account, having a negative history doesn’t necessarily render you ineligible for a home loan.

  • Unpaid Bills or Taxes: Outstanding bills such as council rates or tax payments may be considered, but they can often be explained and resolved.

  • Mortgage Arrears: Lenders may exercise caution if you’ve missed mortgage payments within the last six months.

  • Company in Financial Trouble: If you are a director of a company experiencing financial difficulty, it doesn’t always reflect poorly on your personal credit history.

  • Overcommitted: While having numerous debts or a negative net worth may raise concerns, there are still options available to help you secure a home loan.

Getting Approved for a Bad-Credit Home Loan:

The key to obtaining approval for a home loan with bad credit lies in choosing the right lender. While major banks and traditional lenders tend to have strict lending policies, non-conforming and specialist lenders offer a more flexible approach.

Our team of experienced bad-credit mortgage brokers, including professionals with backgrounds in major bank credit departments, can help you build a strong case for securing a bad-credit home loan. To explore your options and find the path to approval, please contact us at 1300 401 847 or complete our free online assessment form.

Understanding Bad Credit Home Loans:

In Australia, bad credit home loans are financial products provided by non-conforming or specialist lenders.

These mortgage solutions are designed to accommodate diverse situations, especially those in which borrowers have imperfections on their credit files. They serve as a lifeline for applicants whose profiles fall outside traditional bank guidelines.

Types of Bad-Credit Home Loans

Home Loan With Defaults

This category of bad credit home loans is tailored for borrowers with defaults on their credit files. In Australia, lenders generally differentiate between two types of defaults:

Paid defaults: Defaults that have been paid in full.

Unpaid defaults: Defaults that remain unpaid.

A default is a record on your credit file indicating an overdue account, such as a personal loan, credit card bill, utility bill, or phone bill. It’s considered overdue if the payment is 60 days late or if the lender has been unable to contact you. Having a default on your credit file may lead to rejection by most major banks, as it signals an inability to meet debt obligations. For more information on this type of bad credit home loan, please refer to our home loan with defaults page or complete our free assessment form.

Discharged Bankruptcy Home Loan

These bad credit home loans are available to borrowers who have previously been bankrupt and are now discharged. There are lenders in Australia willing to provide financing for property purchase on the day following your discharge from bankruptcy.

The term ‘discharged’ is an automatic legal process that releases the bankrupt individual from bankruptcy, enabling them to apply for credit again. For further details on this type of bad credit home loan, please visit our discharged bankrupt home loan page or complete our free assessment form.

Part IX Debt Agreement

These bad credit home loans cater to borrowers who have entered a Part IX Agreement and have successfully completed it.

    • In Australia, individuals facing debt issues have the option of engaging a debt agreement administrator to help prepare a debt agreement between them and their creditors or lenders.
    • Upon fulfilling the debt agreement, you are discharged from the arrangement. A Part IX remains on your credit file for up to seven years.
    • Certain lenders are willing to consider your mortgage application if you have a completed Part IX Agreement on your credit file.
    • For more information on this type of bad credit home loan, please refer to our Part 9 debt agreement home loan page or complete our free assessment form.
Tax Debt Home Loan

These bad credit home loans are designed for borrowers burdened with a significant debt to the Australian Taxation Office (ATO). Typically, the ATO debt is incorporated into the mortgage, relieving the borrower from any ATO debt.

    • ATO debt is a common issue, often stemming from errors on tax returns that can have repercussions years later.
    • For further details on this type of bad credit home loan, please visit our tax debt mortgage page or complete our free assessment form.
Debt Consolidation Home Loan

These bad credit home loans are suitable for borrowers grappling with multiple small debts that have become unmanageable.

    • In Australia, many individuals choose to consolidate various forms of unsecured debt, such as personal loans, credit cards, and car loans, into their mortgage. This consolidation simplifies their financial situation and results in a single, lower monthly repayment.
    • For more information on this type of bad credit home loan, please refer to our debt consolidation loan page or complete our free assessment form.
Why Choose a Bad Credit Home Loan?

Bad-credit home loans are designed to offer you a chance to rebuild your credit score and create a brighter financial future. Here are several compelling reasons why a bad-credit home loan may be the right choice for you:

  1. Individual Assessment: Your credit history doesn’t automatically lead to application rejection. Mortgage brokers or lenders carefully consider your specific circumstances and assess your application based on merit.

  2. Property Opportunity: You’ve found a property you want to own and don’t want to miss out while waiting for your credit score to improve.

  3. Credit Building: Making regular, on-time repayments on your mortgage with no arrears can help you establish a positive credit history, making it possible to refinance to a better interest rate in the future.

  4. Debt Management: It provides you with the breathing room to address your existing bad debts and clean up your credit file.

  5. Refinancing Plan: While the interest rates on bad-credit home loans are higher due to the lending risk, these loans are often structured with the intention of refinancing to a new lender in a few years, once your credit history is clear.

How Much Can You Borrow with Bad Credit?

The amount you can borrow with a bad credit home loan is contingent upon your specific credit file details. Here’s a breakdown of the borrowing options based on different credit scenarios:

  • Small Paid Default: If you have a small default (less than $500) paid more than six months ago, you may borrow up to 90% or even up to 95% Loan-to-Value Ratio (LVR) in strong cases.

  • More than One Small Paid Default: If you have multiple small paid defaults (less than $1,000 from financial institutions and less than $500 from non-financial institutions), you can borrow up to 85% or potentially 90% of the property value.

  • Moderate Paid Defaults: With up to $3,000 in paid defaults, you can secure a loan of up to 80% of the property value with a prime lender, up to 90% with a specialist lender, or even up to 100% if you have a security guarantee from your parents.

  • Large Paid Defaults: Larger paid defaults ranging from $3,000 to $500,000 can be considered on a case-by-case basis with a strong explanation supported by evidence. In such cases, you may be able to borrow up to 90% of the property value with a specialist lender.

  • Unpaid Defaults: Having any unpaid defaults typically limits your borrowing to a maximum of 90% of the property value with a non-conforming lender. Many lenders may require you to clear the defaults before approving the loan.

  • Judgments or Court Writs: If you have any judgments or court writs on your credit file, you can typically borrow up to 90% of the property value with a non-conforming lender.

  • Part IX Agreement: For more information on borrowing with a Part IX agreement, please refer to our Part IX agreement page.

  • Bankruptcy: For details on obtaining a home loan after bankruptcy, please refer to our bankruptcy mortgages page.

If you have questions or require further information, feel free to reach out to us at 1300 401 847, complete our free online assessment form, or leave your questions in the comments section below.

How to Qualify for a Bad Credit Home Loan

If your credit history has blemishes, there are steps you can take to qualify for a home loan, even with major banks and lenders. The key to success is consulting with a specialist mortgage broker to build a compelling case that demonstrates your past financial issues are indeed in the past.

A credit expert knows precisely what lenders seek when evaluating a borrower’s ability to repay bad credit home loans.

Avoid Accumulating Further Negative Listings

If you are currently facing financial hardship, while you can’t alter your financial history, you can prevent further negative credit listings. This proactive step can strengthen your position with specialist lenders who offer bad credit home loans.

These lenders want to see that you are making, or have made, a genuine effort to address your past financial challenges and are now in a more favorable financial situation. You can demonstrate this by:

  • Meeting your repayments on time.
  • Maintaining communication with lenders to avoid having a “clearout” notation on your credit file.
  • Making payments on your debts, even if they are not substantial.
  • Resolving your existing defaults.

For additional tips, consider exploring the My Credit File page or, if you are currently experiencing financial hardship, seek financial counseling.

Consider the Timing of Your Application

If you have missed payments or defaulted in the past, it might be advisable to wait for your credit file to clear before applying for a home loan. However, this approach may not always be in your best interest.

While waiting may seem like a prudent choice, buying a home sooner, rather than postponing, can potentially position you more favorably in the long term, especially when you consider property equity.

In some cases, bad credit home loans may be the only available option, depending on the extent of damage to your credit file. However, if you’ve had a default, court writ, or inquiry listed on your credit profile for an extended period, and it is close to being cleared, our brokers may recommend waiting until the listing has been removed.

A bad credit home loan is a mortgage option designed for individuals with a less-than-ideal credit history. These loans are tailored to accommodate borrowers who have experienced credit issues in the past, such as defaults, bankruptcies, or missed payments.

Qualification criteria can vary, but generally, bad credit home loans are available to individuals who can demonstrate their ability to make repayments on the loan, despite past credit challenges. Lenders typically assess factors like income, employment stability, and the severity of past credit issues.

Interest rates for bad credit home loans are typically higher than those for standard mortgages. The specific rate can vary based on the lender, the borrower’s credit history, and other factors. Borrowers should be prepared for higher interest costs.

Yes, it’s often possible to refinance a bad credit home loan once you’ve improved your credit score. As your credit improves and you demonstrate a strong repayment history, you may become eligible for a standard mortgage with a lower interest rate.

To enhance your approval prospects, focus on making timely repayments on existing debts, communicate with creditors, and consider resolving outstanding defaults. Consulting a specialist mortgage broker experienced in bad credit home loans can also be highly beneficial.

While there are no specific government programs exclusively for bad credit home loans, some state and federal initiatives aim to support first-time homebuyers, which may indirectly benefit those with credit challenges. These programs often provide financial assistance and reduced stamp duty or grant concessions for eligible buyers.

Our Approach to Finding the Ideal Solution for You

We begin by gaining a comprehensive understanding of your current circumstances and your long-term objectives. Our process is designed to provide you with a tailored recommendation, and it's as simple as following these few steps:


Start by filling out our free assessment form or giving us a call.


Our team will carefully evaluate your unique financial situation.


We thoroughly examine the various options available through our network of trusted lenders.


The end result? We'll pinpoint the most fitting and advantageous home loan offers for you.

Clients Love


Highly recommended. Irfan is an incredibly knowledgeable and professional broker. Irfan was able to help us every step of the way in our journey to buying our first home.

Lesile Morgan Happy Client

Irfan helped us qualify for first time home loan program. He informed us about home loan guarantee program offered by state. We paid just 5% deposit and no lender mortgage insurance. Amazing!

Brandon Zales Happy Client

Clear Pacific was able to provide true zero cost loan for refinancing our home mortgage. We wanted to get fixed rate mortgage in this rising interest rate market. Thanks you john.

Alex Kamarl Happy Client
95% of our borrowers get a discount below the bank standard variable rate
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