Last Updated on July 15, 2022 by Journal Fact
If you’re looking to buy a house in Australia, but have bad credit, don’t worry – you’re not alone. A recent study found that one-third of all Australians have a credit score below 600. So, don’t feel discouraged; don’t close off the dream just because you have bad credit right now.
Before anything else, you should get a hold of your credit report and make sure that everything on it is accurate. You’re entitled to a free copy of your report every year, so take advantage of that. If you see any errors, dispute them immediately. It could be that a mistake is dragging down your score and you don’t even know it.
If everything on your report is accurate, one of the best things you can do is start working on paying down your debt right away. The sooner you can get your debt under control, the better off you’ll be in the long term. While you might think that everything seems pointless now, it’s better to start acting than just accept defeat. For example, you can:
- Make a budget and stick to it
- Get a debt consolidation loan
- Work with a credit counselling service
With the second option, the idea is to pay off all your loans with a new loan. However, this new loan will have a lower interest rate, which can save you money in the long term. Why? Because your repayments will take larger chunks out of the amount you owe rather than just five different interest payments. It’s important to make sure that you compare different consolidation loans before you choose one. There are many lenders out there who offer different interest rates and terms, so you need to make sure you find the best deal for you and your family.
Even if you have bad credit, you may still be able to enter into a rent-to-buy agreement. This is where you agree to rent a property for a set period, with the option to buy it at the end of the rental period. The advantage of this is that it gives you time to improve your credit score and finances so that you can get a better deal when you do buy the property.
If you’re interested in this option, seek services like PublicSquare, which helps people with bad credit find rent-to-buy properties in Australia. You can secure your dream home as a rental before then purchasing the property when you’re ready.
Although most people don’t like the idea, asking friends or family for help to buy a house is an option if you have bad credit. If they can help you with a lump sum for a deposit or act as a guarantor on your mortgage, it can improve your chances of getting approved.
Of course, this isn’t an ideal solution for everyone and can come with its own challenges, like putting strain on relationships. But if you’re struggling to get approved for a mortgage and have bad credit, it’s worth considering. If you choose this route, ensure that an agreement is in place so that everyone is clear on the terms and conditions. This will help avoid any misunderstandings further down the line.
With this list in mind, start doing your research and speak to a mortgage broker to assess the options for your financial position. Whatever you do, don’t give up!