Bad Credit Home Loan Rates
Compare some of the best bad credit home loan rates from Australia’s major lenders, smaller banks and member-owned lenders
Rates starting from
0.00%
Rate p.a.0.00%
Comparison rate*Pepper Money
Owner occupier · Variable · P&I · ≤55% LVR
Monthly repayments
on $600,000 · 30 yrs · P&I
Key facts about bad credit home loans in Australia
- 1
Borrowers with bad credit can still get a home loan in Australia, provided their current finances and income are in a good position.
- 2
Interest rates on bad credit home loans are typically higher than average home loan rates and start from around 6.14% p.a. (comparison rate* 6.32% p.a.)
- 3
To get a bad credit home loan you'll likely need to apply with a specialist lender, some of which only accept applications through a mortgage broker.
Bad credit home loan rates in Australia
The table below shows bad credit home loan rates, as well as key lending criteria from a range of lenders:
| Lender | Interest rates from | Borrowers considered | Max loan amount |
|---|---|---|---|
| Pepper Money – Variable Home Loan | 6.74% p.a. – 12.04% p.a. (comparison rates* from 6.92% p.a. – 12.19% p.a.) Max LVR 95% | Had credit issues in the past year, including mortgage arrears. Entered into a debt agreement (IX or X) or previously been bankrupt. Been refused credit by another lender. | $2.5m |
| Bluestone – Variable Home Loan | From 7.04% p.a. (comparison rate* from 7.25% p.a.) Max LVR 90% | Accepts most types of defaults, late or missed payments and over-the-limit credit cards. One-day discharged bankrupt accepted. | $3m |
| Liberty | From 7.14% p.a. (7.48% p.a. comparison rate*) Max LVR 95% | Less than perfect credit history including paid or unpaid defaults, mortgage arrears and bankruptcy. | $10m |
| Axis Lending | Quoted on inquiry Max LVR 95% | Borrowers with ‘less than perfect credit’. | $2m |
| MA Money | Quoted on inquiry Max LVR 90% | Minor credit impairments, loan arrears, one-day discharged bankruptcy accepted, paid and unpaid defaults considered. | $2m |
| ORDE Financial (apply through broker only) | Quoted on inquiry Max LVR 85% | Discharged bankrupts, defaults and mortgage arrears considered. | $3m |
| Red Rock | Quoted on inquiry Max LVR 95% (purchase) 90% (refinance) | All paid or unpaid defaults or judgments, discharged bankrupts. | No max advertised |
| Resi – Renew/Restart Home Loan | Quoted on inquiry Max LVR 95% | Low credit scores, credit impairment including prior bankruptcies and mortgage arrears. | $3m |
What are the interest rates on bad credit loans?
Interest rates on bad credit home loans in Australia typically range from around 6%-12% p.a. depending on the borrower and exactly how problematic their credit history is.
Unlike standard home loan rates, which tend to be the same for all borrowers in the same category, bad credit home loan rates are highly personalised to take account of the borrower’s credit history, income, debts and other factors.
As a result some, borrowers with a bad credit score will qualify for a rate that’s broadly comparable to standard home loan rates. Other bad credit borrowers will need to pay a much higher rate.
What’s a bad credit score and will I qualify for a home loan with one?
In Australia, any credit score below 600 could be considered ‘bad’ in a lender’s eyes. It will ultimately depend on the lender and which credit bureau they use to run credit score checks. But if your credit score is below 450, you’ll almost certainly be viewed as a bad credit borrower by most lenders.
The better news is that having a low credit score doesn’t necessarily mean you won’t qualify for a home loan. Instead it means you will likely need to be much more selective about where you apply for a home loan as you will have fewer lenders to choose from.
You’ll probably also need to pay a higher interest rate due to the increased risk bad credit lenders are taking on.
6 ways to get a better home loan rate with bad credit
- 1
Improve your credit score
It will be easier to get a loan at a better rate if you pay off any outstanding defaults, fix any errors in your credit history and ideally wait until negative items fall off your credit report (timescales for this vary).
- 2
Save a large deposit
Bad credit borrowers in particular can benefit from contributing a large deposit towards the property purchase (above 20%). This reduces risk for the lender and may result in a lower interest rate.
- 3
Lower credit limits
If you have a credit card, consider lowering the limit to boost your borrowing capacity. Clearing other personal debt (car loans etc) could also help with mortgage approval and getting the best home loan rate you can.
- 4
Manage your spending
Before applying for a bad credit home loan, it’s a good idea to keep discretionary spending and more broadly show discipline in terms of how you manage your money.
- 5
Connect with a specialist broker/lender
If you need a bad credit home loan, major banks and most other mainstream lenders are unlikely to consider you for a loan. Focus on finding the most suitable option and the best rate possible from brokers and lenders that specialise in bad credit lending. Some bad credit home loans are only available through a mortgage broker.
What home loan interest rate will I qualify for with bad credit?
Interest rates on bad credit home loans are personalised to the borrower based on their risk profile. Lenders take into account the details in your credit report, employment situation, your debt-to-income ratio and loan-to-value ratio.
What are the fees on bad credit home loans?
Fees are generally also higher on bad credit home loans and can add significantly to your overall costs. Most fees will be reflected in the loan’s comparison rate, but it’s worth checking individual fees too. Here are the main fees you may be charged and indicative amounts for each:
Application/establishment fee: Up to $1,000
Risk fee: Up to 3% of the value of the loan
Legal fees: Generally up to $500
Title protection fee: Up to $300
Valuation fee: Up $400
Settlement fee: Up to $200
Ongoing fees: Up to $50 per month
Discharge fee: Up to $400
Loan variation fee: Up to $200
Fees shown are a general guide only. Actual lender fees may vary.