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Can I refinance if I have bad Credit?

A bad credit report doesn't always mean you'll be declined by lenders for a refinance of your home loan.


While having a bad credit rating is not ideal, particularly if you want to refinance, there are some specialist lenders that will still review your application.


However, you'll need to make a conscious effort to improve your credit rating and take control of your debt. This may involve demonstrating to the lender that you have enough equity or savings to borrow less than 80% loan-to-value ratio (LVR) or paying a higher rate with risk fees attached.


Our top tips for how to refinance if you have bad credit:


🔸 Visit us! A licensed mortgage broker can discuss your borrowing needs with you in detail and help you with the application process. They will be able to draw upon their panel of lenders to find one that's more likely to review your application given your impaired credit status.


🔸 Get a copy of your credit file. Accessing your credit file will help you understand how you look from the lender's perspective. This will give you an idea of the things a lender will look at when considering you as a customer. You can see your current credit limits, number of credit cards that you have and any late payments which have been reported.


🔸 Take control of your debt. The next step is to be proactive about trimming any existing debt that you have. If you're having trouble meeting your credit card or utility payments, consider contacting your provider to negotiate a new payment plan to ensure that you pay your bills or repayments in full and on time.


🔸 If you can, borrow less than 80% LVR. This avoids the need for Lender’s Mortgage Insurance (LMI) for high documentation loans and means you’re a lower risk to the lender. Try to show the lender that you have enough equity or savings to maintain an LVR below 80%. Reach out to speak to us today if you need help consolidating some of your debt.


Reach out to speak to us today if you need help consolidating some of your debt.




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