February 1st 2021

Refinancing with
Bad Credit

When you refinance your home loan, you’ll need to go through the same process that led you to set up your mortgage in the first place. As you’re applying for a new home loan to pay out your existing one, the banks will be looking at your finances to decide whether you should be approved.

If you have a bad credit score, it will have an impact on your chances, so it’s best to get your finances into good shape before you try to refinance. With a better credit score, you’ll have more opportunities to get a good deal and find a home loan that works for you.

Here’s what you should do if you want to look at refinancing with bad credit.

Find Out Your Credit Score

First of all, you need to understand your credit situation. Your credit history will show if you are behind in your repayments or have money owing on
your home loans, personal loans, credit cards and even utility bills. Previously declined loan applications and filing for bankruptcy can also show up in your history.

If you want to know exactly where you stand, you can find out your credit score online or even access your full credit file to see what has been flagged in your history. You can get one free copy of your credit file every year by contacting any of Australia’s credit reporting agencies, including Equifax and Experian.

Take Care of Your Debt

If you have outstanding debt on your file, you want to find a way to pay this off as soon as you can. You could talk to your existing lender about consolidating your debt, which could actually involve refinancing your home loan.

It might not give you the chance to switch to another home loan product or lower your interest rate, but it will make it easier for you to manage your debt going forward. As your credit cards and personal loans will likely have higher interest rates than your mortgage, it will also help you reduce the total amount you owe. The faster you get on top of your debt, the sooner you’ll be able to look at mortgage refinancing in a way that will benefit you moving forward.

Alternatively, you could look at using your savings or restructuring your budget to help you get on top of your debts. Try to avoid using your credit cards in the meantime and ask your lender if you can go onto a payment plan if needed.

GET STARTED WITH
LOAN MONSTER

Are you looking to refinance? Want to buy your very first home? Need an investment property loan? We can take care of it all for you at Loan Monster. Get in touch with our team and let’s get started today.

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Look at Specialist Lenders

While you’re trying to fix your bad credit score, you could also look at refinancing with a specialist lender. When reviewing your credit history, these lenders will take other factors into consideration. They recognise that you may have made mistakes in the past and understand that personal situations such as sickness or divorce could have had an impact on your credit score.

Even though these lenders specialise in bad credit home loans, it’s important to remember that a rejected application will affect your credit score.

This is why it’s a good idea to go to a mortgage broker.

Why Use a Mortgage Broker?

You could chat to your own bank or try to find a specialist lender, but a mortgage broker will be able to give you the best chance for success. They will look at your unique situation and compare loans across a wide range of lenders to find the right one for you.

As mortgage brokers deal with banks on a daily basis, they know what lenders are looking for when reviewing your application. They can advise you on how to fix your credit score and what else you can do to improve your finances to give you a better chance of getting a refinancing deal that works for you.

Get in Touch with Loan Monster

If you’re thinking about refinancing, have a chat with the team at Loan Monster today. No matter how good or bad your credit score may be, our mortgage brokers can walk you through the whole process and show you what options are available to you. Our team is here to provide you with the right advice and help you get the best possible outcome.

Contact us today and we’ll get back to you within 24 hours, even on weekends.

* The information contained in this website should not be taken as constituting personal advice. We recommend that you seek professional assistance before acting upon any information provided or linked on this web site

GET STARTED WITH
LOAN MONSTER

Are you looking to refinance? Want to buy your very first home? Need an investment property loan? We can take care of it all for you at Loan Monster. Get in touch with our team and let’s get started today.

Get started today

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