Can I get a home loan with no credit check?

Can I get a home loan with no credit check?

A credit check is a crucial part of the home loan application review process, and most lenders will not approve your home loan application without it. Some lenders may offer, with no credit check, home loan pre-approvals, but the full, formal approval will depend on your credit history. 

The legislation of the National Consumer Credit Protection Act in 2009 requires lenders to review credit or loan applications after collecting as much information as possible about you. Since your credit file contains relevant information regarding your ability to take on and repay debt responsibly, lenders access it to arrive at a lending decision faster.

You should remember that a credit check can be useful for you as well, as a way of preparing to apply for a home loan. Consider finding out your credit score and see if you need to take steps to improve it. If you have taken on debt in the past and paid it back in time, you are likely to have a good credit score. In case you’ve had some bad experiences with debt, you can use a credit check to gauge how specific incidents can impact your credit score positively. Either way, understanding your credit history can help you convince lenders that you can repay their loan comfortably.

Can I prequalify for a home loan with no credit check? 

A home loan pre-approval can tell you about the size of the home loan you’re eligible for. If you’re unsure about the home you want to buy, knowing how much you can borrow can simplify budgeting for and finding a suitable home. 

However, a no credit check home loan pre-approval, which is usually a system-generated approval, may not be reliable. The full assessment prepared by the lender includes a credit check and provides a more accurate estimate of the amount you can borrow. Given this, the full assessment is generally the preferable option.

Again, prequalifying for a loan does not guarantee that your loan application will be approved, as the lender may need to evaluate the property you’re buying. Equally, if you don’t get a pre-approval after a full assessment, it doesn’t reduce the chances of your home loan application getting approved. You may want to discuss the pre-approval rejection with the lender and find out if it had anything to do with your credit score or credit history. Lenders may suggest the steps you can take to rectify your credit situation if that is the cause for the rejection, to get your home loan application approved.

Can I apply for bad credit home loans with no credit check?

Just because you have a bad credit score or a problematic credit history doesn’t mean you can’t get a home loan. You can choose to discuss your credit-related issues with the lender before submitting your application and see if you get options appropriate for your financial situation. For instance, lenders may suggest applying for a smaller loan amount, under 80 per cent of your home’s value, and possibly charge a higher interest rate. You’ll need to put up a higher deposit, which may require saving up for a longer time. However, you’ll be able to improve your credit score if you successfully repay the loan in time, with no delayed repayments.

Another option which can allow you to borrow more than 80 per cent of your home’s worth is agreeing to pay Lender’s Mortgage Insurance (LMI). While LMI, calculated based on a percentage of the loan amount, can be a significant cost, it gives lenders the confidence they’ll get their money back. Depending on how much LMI you can pay for, you may be able to borrow as much as 95 per cent of the property value. Alternatively, some lenders may recommend adding a co-signer to the loan who has a better credit rating or getting someone to guarantee the loan for you. 

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What is a bad credit home loan?

A bad credit home loan is a mortgage for people with a low credit score. Lenders regard bad credit borrowers as riskier than ‘vanilla’ borrowers, so they tend to charge higher interest rates for bad credit home loans.

If you want a bad credit home loan, you’re more likely to get approved by a small non-bank lender than by a big four bank or another mainstream lender.

How can I get a home loan with bad credit?

If you want to get a home loan with bad credit, you need to convince a lender that your problems are behind you and that you will, indeed, be able to repay a mortgage.

One step you might want to take is to visit a mortgage broker who specialises in bad credit home loans (also known as ‘non-conforming home loans’ or ‘sub-prime home loans’). An experienced broker will know which lenders to approach, and how to plead your case with each of them.

Two points to bear in mind are:

  • Many home loan lenders don’t provide bad credit mortgages
  • Each lender has its own policies, and therefore favours different things

If you’d prefer to directly approach the lender yourself, you’re more likely to find success with smaller non-bank lenders that specialise in bad credit home loans (as opposed to bigger banks that prefer ‘vanilla’ mortgages). That’s because these smaller lenders are more likely to treat you as a unique individual rather than judge you according to a one-size-fits-all policy.

Lenders try to minimise their risk, so if you want to get a home loan with bad credit, you need to do everything you can to convince lenders that you’re safer than your credit history might suggest. If possible, provide paperwork that shows:

  • You have a secure job
  • You have a steady income
  • You’ve been reducing your debts
  • You’ve been increasing your savings

What is a building in course of erection loan?

Also known as a construction home loan, a building in course of erection (BICOE) loan loan allows you to draw down funds as a building project advances in order to pay the builders. This option is available on selected variable rate loans.

What factors does Real Time Ratings consider?

Real Time RatingsTM uses a range of information to provide personalised results:

  • Your loan amount
  • Your borrowing status (whether you are an owner-occupier or an investor)
  • Your loan-to-value ratio (LVR)
  • Your personal preferences (such as whether you want an offset account or to be able to make extra repayments)
  • Product information (such as a loan’s interest rate, fees and LVR requirements)
  • Market changes (such as when new loans come on to the market)

What is a construction loan?

A construction loan is loan taken out for the purpose of building or substantially renovating a residential property. Under this type of loan, the funds are released in stages when certain milestones in the construction process are reached. Once the building is complete, the loan will revert to a standard principal and interest mortgage.

How much are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

Mortgage Calculator, Repayment Frequency

How often you wish to pay back your lender. 

Mortgage Calculator, Deposit

The proportion you have already saved to go towards your home. 

What is the ratings scale?

The ratings are between 0 and 5, shown to one decimal point, with 5.0 as the best. The ratings should be used as an easy guide rather than the only thing you consider. For example, a product with a rating of 4.7 may or may not be better suited to your needs than one with a rating of 4.5, but both are probably much better than one with a rating of 1.2.

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

What is the flexibility score?

Today’s home loans often try to lure borrowers with a range of flexible features, including offset accounts, redraw facilities, repayment frequency options, repayment holidays, split loan options and portability. Real Time Ratings™ weights each of these features based on popularity and gives loans a ‘flexibility score’ based on how much they cater to borrowers’ needs over time. The aim is to give a higher score to loans which give borrowers more features and options.

Mortgage Calculator, Loan Purpose

This is what you will use the loan for – i.e. investment.