Bad Credit Home Loans Your Guide

Bad Credit Home Loans for Applicants with Adverse Credit

Bad credit home loans are the home loans specially created by Lenders for borrowers with an adverse credit history. These borrowers are identified by the loan lenders as someone to whom lending can be a risky venture. While traditional banking institutions generally reject loan applications from such borrowers without a second thought, several non bank lenders that specialize in the area, provide easy to grab offers to these very people!

Acceptable bad credit history includes: –

• Tax debts
• Paid or Unpaid Defaults or Judgement’s
• Mortgage or loan arrears
• Discharged bankrupts or part 9 from 1 day discharged home loan
• Unsecured debt consolidation (credit cards and personal loans)
• Low credit score

How to access bad credit home loans?

There are many lenders in the market today who offer home loans for bad credit at an attractive interest rate to the customers with an adverse credit history. These are licensed lenders called non conforming lenders. It is generally believed that bad credit home loans are offered at higher rates than the regular loans but not all bad credit home loans have high interest rates.
Bad credit home loans usually vary from case to case. They are assessed on the merit of each and every borrower depending on his credit history and location of security. Maximum loans are to 95% LVR on purchases and 90% LVR on refinances.
The lender assesses based on the following:
• How much the loan should be priced?
• What are the risks involved?
• Location of the security?
• Is the case of applicant justified?

Fast and easy ways to get Bad Credit Home Loans

Bad credit home loans are the loans specially designed by lenders for the borrowers with a bad credit background. These loans are designed for borrowers who have low credit scores or defaults. These defaults can be either paid or unpaid or can be arrears on loans. The credit impairments that constitute a bad credit history may include one, some or all of the following –

• Unpaid bills or tax
• Mortgage or loan arrears
• Discharged bankrupts (From 1 Day)
• Discharged from Part 9 (from 1 Day)
• Tax debts
• Unsecured debt consolidation(credit cards and personal loans)
• Company administrations

How can you access these home loans?

Lenders known as Non Conforming Lenders offer home loans to such borrowers those have bad credit. These loans are offered at a higher rate of interest than the normal home loans.

Parameters for the bad credit home loans: –

Bad credit home loan interest rates usually vary from case to case. Lenders decide on how much the loan should be priced at and what are the risks involved.
Generally you can borrow up to 95% LVR on a purchase and up to 90% lvr on a refinance.
It is generally considered better if the loan default history is older, borrowed loans are cleared and the income source is secure.

General rules for pricing bad credit home loans are based on following parameters: –

1) The duration of credit default history
2) Whether the loan defaults are paid or unpaid till the moment
3) Nature and type of credit defaults
4) The loan to value ratio requested by the applicant
5) The employment standing or the source of income of the bad credit loan applicant.
6) Location of the Security

Best Tips in attaining a home loan with bad credit with minimum hassle: –

1) Applicant should be updated about his credit history and he should apply for the new credit only after clearing his past liabilities.
2) The applicant should request for the lower loan to value ratio as with lower loan to value ratio he needs to pay a lower rate of interest.
3) The applicant should be able to highlight his present source of income in front of the lenders as it adds to his chances of assessing new loans.
4) He should be aware that the older the default history the better for him.
5) He should be updated about the nature of loan default history-Utility and Telco type defaults are considered less severe than financial defaults.
6) It is always advised that such defaulters seek advice from a financial expert before applying for a bad credit loan.

Conclusion:
Presently, most of the lenders operating in the market offer home loans with bad credit at a very reasonable interest rate to the impaired applicants. Considering the growth in the bad credit home loans market many big players have entered the market in a big way making the interest rate and down payment highly competitive. Home loans for bad credit are a booming industry that has fulfilled the loan needs of many borrowers who were ineligible earlier to borrow in the light of the impaired credit history.