A large number of individuals in Australia get bad credit rating due to divorce and as a result, they are unable to get a home loan. Every year, around 33% of couples experience divorce in Australia. This eventually affects their credit score as they either miss or fail to make a few repayments on time. The financial institutions never want to understand the reasons associated with your bad credit rating or how you are moving back towards the right direction.
However, there are certain banks where you can qualify even with bad credit for a home loan if you present a strong reason along with evidence for the damaged caused to your credit score.
How to Get a Home Loan?
Not only does divorce take a toll on you emotionally, but also can damage you financially, especially if it was a rough experience. This can lead to unpaid mortgage repayments as your household salary is reduced to half and your spouse is not willing to cooperate. As a result, you would be unable to afford the loan on your own.
Qualification for Bad Credit Home Loan
While a regular Aussie will understand the pain of going through a rough divorce, but this is not the case with financial institutions. They are reluctant and at times simply refuse to lend money to those who have bad credit history, because they believe that a borrower would fail to make the repayment again. This is why most banks or other financial institutions have defined criteria to provide bad credit home loans.
You are more likely to qualify for the loan in case of the following:
- If an individual made a default of small amount, i.e., $500, and
- It has been more than six months since the repayment has been made.
Moreover, a specialist mortgage broker like Hunter Galloway with strong connections to the banks can assist if you have serious issues regarding bad credit, such as court writs, judgments, or bankruptcy.
Keeping the Damage to a Minimum after Divorce
The following are some measurements that can be taken for reducing the effect of bad credit rating and improving the chance of home loan approval:
- Freeze Your Joint Accounts – First of all, close all the joint accounts and open a new one that cannot be accessed by your partner. This is the first step any individual should take after he or she experiences divorce.
- Look for a Legal Consultant – Also, seek a legal advice. For example, talk to your solicitor to keep the house (owned by your spouse) from selling. You can also look for an advice regarding separate properties with joint ownership.
- Compile Your Financial Information – You should also compile your financial documents to be able to know your expenses. For example, gather your credit card bills, utility bills, insurance policies, mortgage documents, and tax records.
- Prepare a Budget – Budgeting is an essential element in every aspect of life. It is advisable to prepare a budget for all the expenses in order to figure out what you can spare. If you are able to save a few dollars every week, it is going to make a huge difference in the future.
- Seek Financial Advice – Lastly, you must seek the assistance of an accountant or a financial advisor so that he can help you plan the future expenses.
It is not easy to get a bad credit home loan, as you have to fulfil different criteria. However, if you manage to keep the above-mentioned tips in mind, it will make the process of borrowing bad credit home loan easier. Also, it will enable you to manage your spending budget so as to be well prepared for anything unusual in times to come.
Speak to Hunter Galloway about how we can assist you with your bad credit loans in Brisbane or Australia.