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Ways To Procure A Home Loan With Bad Credit

By Expert Author: Adam Ibrahim

Getting a home loan with a bad credit history can be a daunting task. However, with the right approach, it is possible to improve your chances of approval. Here are a few ways to improve chances of getting your application approved.

Apply to lenders that do not use credit scoring

To begin with, there are some lenders that do not use credit scoring as one of the main criterion for eligibility. Many use a computer-based system to assess home loan application. The data collected in your application is provided a rating and if the computer identifies any red flag, your application is likely to be declined even before a real person has a chance to assess your case. However, the chances of obtaining approval for bad credit home loans from a lender who does not use credit scoring are much brighter. Your application will be assessed by a real person who will determine the reason for your past credit problems and evaluate your current financial situation and base their decision accordingly.

Avoid mortgage insurance by covering 20% of the loan

Several people who have enrolled in Australian debt recovery programs have been able to seek home loans by avoiding mortgage insurance. Approvals for home loans need to be obtained if you borrow more than 80% of the value of the property from the lender and the mortgage insurer. However, as long as you have enough funds to cover 20% of the deposit and bear the costs of stamp duty and legal fees, your application is not likely to be assessed by a mortgage insurer. This gives your application a greater chance of being approved.

Demonstrate the ability to improve your credit situation

If you have had mounting debt problems in the past, there can be nothing better than proving to lenders that your financial situation has improved. Once you demonstrate that you are back on track and are able to meet your financial commitments, you could be a step closer to procuring a home loan. Make sure you have proof of having paid not only your credit card bills and loans on time but your rent and utilities as well. Many conventional lenders may not be able to help if your credit history is very poor. However, there are specialist lenders who do offer bad credit home loans based on the element of risk. Their interest rates are usually higher, but if you can improve your credit situation, there is the possibility to opt for refinance at a lower rate.

Seek professional help

In addition, it is always prudent to seek professional advice and help fix your bad credit history. There are a number of specialist credit repair agencies who can help. There could be some adverse entries that can hurt your credit report and need to be removed immediately. When it comes to Australian debt recovery, there are several programs that may suit your needs best. Never make the mistake of settling for the first offer. Shop around for a home loan but make sure you don’t apply to several lenders. Every time you make an application, the lender will pull up your credit report, which will further impact your report. Be forthcoming with your mortgage broker and let know why you experienced credit problems so that they can be addressed appropriately with prospective lenders.


Author’s Bio:

Author is an experienced content writer with many years of experience in hand and his area of expertise is finance. He has been appreciated for his many articles published on the subject of debt management. Now he is providing information on bad credit home loans and Australian debt recovery.

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