How to get pre approved for a home loan with bad credit
Getting a pre approval for a home loan with bad credit needn't be any harder than a regular pre approval, with the main difference being the deposit required and the interest rate and fees you would need to pay. When applying for a pre approval with bad credit, we recommend you talk to a Mortgage Broker; however, with sufficient home work, you can usually go through the following steps yourself.
Find out how much you need for your home loan deposit based on how bad your credit is.
Most lenders won't accept your application if you have a default worth more than $500 on your credit file, and even then, many would decline it. You need to talk to a Mortgage Broker or a few lenders to find out what deposit would be required based on how bad your credit is. In the most severe cases, you would generally need a 20% deposit; however, if you have a only a couple of defaults, you may only need a 5% or 10% deposit.
How to get your borrowing power for a bad credit pre approval?
Once again, your Mortgage Broker can do all these calculations for you. If you want to do it yourself, there are calculators available on Google, however these should be treated only as a very rough guide. For an accurate figure on how much you can borrow, you (or your Broker) would need to call up each lender individually, give them the relevant details, and ask for a figure of how much you can borrow.
Prepare and submit your bad credit pre approval application!
Now you can submit your application. The Mortgage Broker or lender of your choice should be able to provide you with a full list of what's required. As a minimum, you will need to provide your Driver Licence or equivalent ID, proof of income i.e. payslips, bank statements and liability statements.
Time frames on a bad credit pre approval for a home loan.
This will vary depending on the Broker and lender you go through, however you can expect:
- Submitting your application: most Mortgage Brokers will have this done within 24 hours.
- After submission: this depends on how bad your credit is, however most lenders will assess your pre approval application in 2 - 8 business days.
- After approval: Your bad credit pre approval will generally last 90 days, although this can differ.
Summary: How to get pre approved for a home loan with bad credit
- Talk to a Broker or multiple lenders to determine your funds-required and serviceability.
- Apply for your bad credit pre approval for a home loan.
- Once you are pre approved, find yourself a house to purchase.
|We can help with:|
|Borrowing power calculations|
|Calculating the funds you will require.|
|Finding the lowest interest rates for your situation|
|Completing the application on your behalf|
|Arranging a free bad credit pre-approval.|
|Must have a regular income.|
|Permanent Australian Resident.|
|Must have a 5% deposit or security guarantor.|
Our Mortgage Brokers can meet you at your home in Brisbane.
Our Mortgage Broker can arrange your home loan at no cost.
Regular updates throughout the process by text, email or phone.