Pepper home loan repayment calculator

Thinking about taking out a home loan with Pepper? Use our home loan calculator to see how much you’d have to repay under different borrowing scenarios. You can also see how Pepper home loans compare with other options.

I am an

With a repayment type

Borrow amount

$

Deposit amount %

Loan term

Your estimated mortgage repayments

at interest rate 2.35%

Total interest payable

$0

Total loan repayments

$0

Pros and cons

  • Award winning loans
  • Flexible loan options
  • Cater to borrowers with specific needs like low doc loans and self-employed
  • No branch access
  • Less competitive interest rates on some specialist loans

Pepper home loans rates

Advertised Rate

2.35

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

2.55

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

2.45

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

2.65

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

2.49

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

2.69

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

2.69

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

2.89

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

2.69

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

2.89

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

2.79

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

2.99

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

2.95

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.15

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.05

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.25

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.19

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.39

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.19

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.39

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.29

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.49

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.29

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.49

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.35

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.55

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.35

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.55

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.29

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

3.57

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

3.39

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

3.67

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

3.49

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.69

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.45

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

3.73

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

3.59

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.79

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.65

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.84

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.79

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

3.98

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.74

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.02

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

3.79

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.07

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

3.89

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

4.27

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

3.99

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.27

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

3.99

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.27

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

3.99

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.27

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.24

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.52

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.39

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

4.58

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

4.19

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

4.64

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

4.34

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.71

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.49

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.77

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.59

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

4.78

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

4.44

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.81

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.44

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.85

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.59

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.89

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.69

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.96

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.54

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

4.98

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.84

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.14

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.49

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

5.15

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

4.89

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.19

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

4.84

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.28

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.14

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.44

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.14

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.51

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.29

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.59

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.14

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.61

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.24

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.61

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.45

% p.a

Variable

Total estimated upfront fees
$1039
Comparison Rate*

5.64

% p.a

Ongoing fee
$10 monthly
Go to site
More details
Advertised Rate

5.24

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.66

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.39

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.69

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.34

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.78

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.49

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.79

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.49

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.79

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.54

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

5.81

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.54

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.04

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.64

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.11

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.74

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.34

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

5.94

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.35

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.04

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.47

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.04

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.49

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.14

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.61

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.39

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.69

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.39

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.69

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.49

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.79

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.44

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.95

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.69

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.96

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.69

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

6.96

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

6.99

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

7.29

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

7.15

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

7.42

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

7.15

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

7.42

% p.a

Ongoing fee
$15 monthly
Go to site
More details
Advertised Rate

7.49

% p.a

Variable

Total estimated upfront fees
$1835
Comparison Rate*

7.79

% p.a

Ongoing fee
$15 monthly
Go to site
More details

Pepper customer service

Pepper is an online-only lender, meaning that there are no branches or mobile lenders. Potential Pepper customers can contact the lender through the home loan enquiry hotline, by filling out an online enquiry form, or by emailing Pepper directly.

  • Customer service centre (phone, email)
  • Online banking

How to apply for a Pepper home loan

Customers wanting to apply for a Pepper home loan can do so by filling out an online enquiry form, calling the hotline or emailing a lending specialist. 

Before applying for a home loan it is important to consider how much money you can afford to borrow, given your financial situation and income. 

You will also need to provide documentation when applying for a home loan. This may include:

  • Personal identification
  • Proof of income – whether you are self-employed or work for an employer
  • Information regarding your current debts, liabilities and assets including any personal or car loans
  • Details of your ABN and GST registration
  • An accountants letter if necessary

About Pepper home loans

Pepper is a specialist lender, and as such, some of its home loans are different from those offered by more traditional banks. 

Pepper home loans suit borrowers in unique circumstances, but they still serve a range of borrower types, including:

  • First-time home buyers
  • Investors
  • Refinancers
  • Renovators
  • Self-employed (alt-doc loans)

Pepper home loans can assist borrowers who have had credit issues in the past, borrowers who are overcommitted financially, and borrowers who have experienced life events that have caused defaults on their credit files.

Pepper mortgages have a maximum loan term of 30 years. Extra repayments are allowed. Depending on the product you choose, your Pepper loan may have an offset account and a redraw facility. Borrowers can choose from weekly, fortnightly, or monthly repayments, and can choose between principal and interest and interest-only payments.

Pepper home loans generally charge establishment and ongoing fees.

 

Pepper home loan rates

Pepper home loan interest rates vary from loan to loan. As a general rule, more traditional borrowers with lower LVRs get lower interest rates than non-traditional borrowers with high LVRs. 

Pepper’s mortgage interest rates differ between owner-occupiers and investors, as well as between principal and interest and interest-only mortgages. Interest-only payments are available for a maximum of five years.

Pepper’s flexible home loans can be valuable to non-traditional borrowers who may not be able to take out home loans from banks, though the rates on these loans may be higher than for more traditional loan products.

Pepper home loans review

Pepper’s home loan products can be valuable for customers who don’t fit within traditional borrower guidelines. Pepper offers mortgages for self-employed customers, PAYG employees, and those who have had issues with their credit in the past.

Pepper does not have any branches, so Pepper home loans are only suitable for borrowers who are willing to have their home loan communication done entirely online or over the phone.

Pepper offers home loan products for non-traditional borrowers, including those who have unusual financial histories, so their rates aren’t always as low as other online-only lenders who cater to more traditional borrowers.

While fees may vary from loan to loan, Pepper home loans tend to charge an establishment fee as well as ongoing monthly service fees.

Learn more about home loans

How do I apply for a home improvement loan?

When you want to renovate your home, you may need to take out a loan to cover the costs. You could apply for a home improvement loan, which is a personal loan that you use to cover the costs of your home renovations. There is no difference between applying for this type of home improvement loan and applying for a standard personal loan. It would be best to check and compare the features, fees and details of the loan before applying. 

Besides taking out a home improvement loan, you could also:

  1. Use the equity in your house: Equity is the difference between your property’s value and the amount you still owe on your home loan. You may be able to access this equity by refinancing your home loan and then using it to finance your home improvement.  Speak with your lender or a mortgage broker about accessing your equity.
  2. Utilise the redraw facility of your home loan: Check whether the existing home loan has a redraw facility. A redraw facility allows you to access additional funds you’ve repaid into your home loan. Some lenders offer this on variable rate home loans but not on fixed. If this option is available to you, contact your lender to discuss how to access it.
  3. Apply for a construction loan: A construction loan is typically used when constructing a new property but can also be used as a home renovation loan. You may find that a construction loan is a suitable option as it enables you to draw funds as your renovation project progresses. You can compare construction home loans online or speak to a mortgage broker about taking out such a loan.
  4. Look into government grants: Check whether there are any government grants offered when you need the funds and whether you qualify. Initiatives like the HomeBuilder Grant were offered by the Federal Government for a limited period until April 2021. They could help fund your renovations either in full or just partially.  

Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

How is interest charged on a reverse mortgage from IMB Bank?

An IMB Bank reverse mortgage allows you to borrow against your home equity. You can draw down the loan amount as a lump sum, regular income stream, line of credit or a combination. The interest can either be fixed or variable. To understand the current rates, you can check the lender’s website.

No repayments are required as long as you live in the home. If you sell it or move to a senior living facility, the loan must be repaid in full. In some cases, this can also happen after you have died. Generally, the interest rates for reverse mortgages are higher than regular mortgage loans.

The interest is added to the loan amount and it is compounded. It means you’ll pay interest on the interest you accrue. Therefore, the longer you have the loan, the higher is the interest and the amount you’ll have to repay.

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

What do people do with a Macquarie Bank reverse?

There are a number of ways people use a Macquarie Bank reverse mortgage. Below are some reasons borrowers tend to release their home’s equity via a reverse mortgage:

  • To top up superannuation or pension income to pay for monthly bills;
  • To consolidate and repay high-interest debt like credit cards or personal loans;
  • To fund renovations, repairs or upgrades to their home
  • To help your children or grandkids through financial difficulties. 

While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

Can I take a personal loan after a home loan?

Are you struggling to pay the deposit for your dream home? A personal loan can help you pay the deposit. The question that may arise in your mind is can I take a home loan after a personal loan, or can you take a personal loan at the same time as a home loan, as it is. The answer is that, yes, provided you can meet the general eligibility criteria for both a personal loan and a home loan, your application should be approved. Those eligibility criteria may include:

  • Higher-income to show repayment capability for both the loans
  • Clear credit history with no delays in bill payments or defaults on debts
  • Zero or minimal current outstanding debt
  • Some amount of savings
  • Proven rent history will be positively perceived by the lenders

A personal loan after or during a home loan may impact serviceability, however, as the numbers can seriously add up. Every loan you avail of increases your monthly installments and the amount you use to repay the personal loan will be considered to lower the money available for the repayment of your home loan.

As to whether you can get a personal loan after your home loan, the answer is a very likely "yes", though it does come with a caveat: as long as you can show sufficient income to repay both the loans on time, you should be able to get that personal loan approved. A personal loan can also help to improve your credit score showing financial discipline and responsibility, which may benefit you with more favorable terms for your home loan.

Can I get a NAB home loan on casual employment?

While many lenders consider casual employees as high-risk borrowers because of their fluctuating incomes, there are a few specialist lenders, such as NAB, which may provide home loans to individuals employed on a casual basis. A NAB home loan for casual employment is essentially a low doc home loan specifically designed to help casually employed individuals who may be unable to provide standard financial documents. However, since such loans are deemed high risk compared to regular home loans, you could be charged higher rates and receive lower maximum LVRs (Loan to Value Ratio, which is the loan amount you can borrow against the value of the property).

While applying for a home loan as a casual employee, you will likely be asked to demonstrate that you've been working steadily and might need to provide group certificates for the last two years. It is at the lender’s discretion to pick either of the two group certificates and consider that to be your income. If you’ve not had the same job for several years, providing proof of income could be a bit of a challenge for you. In this scenario, some lenders may rely on your year to date (YTD) income, and instead calculate your yearly income from that.

Can first home buyers apply for an ING home loan?

First home buyers can apply for an ING home loan, but first, they need to select the most suitable home loan product and calculate the initial deposit on their home loan. 

First-time buyers can also use ING’s online tool to estimate the amount they can borrow. ING offers home loan applicants a free property report to look up property value estimates. 

First home loan applicants struggling to understand the terms used may consider looking up ING’s first home buyer guide. Once the home buyer is ready to apply for the loan, they can complete an online application or call ING at 1800 100 258 during regular business hours.

How do you determine which home loan rates/products I’m shown?

When you check your home loan rate, you’ll supply some basic information about your current loan, including the amount owing on your mortgage and your current interest rate.

We’ll compare this information to the home loan options in the RateCity database and show you which home loan products you may be eligible to apply for.

 

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.

Who offers 40 year mortgages?

Home loans spanning 40 years are offered by select lenders, though the loan period is much longer than a standard 30-year home loan. You're more likely to find a maximum of 35 years, such as is the case with Teacher’s Mutual Bank

Currently, 40 year home loan lenders in Australia include AlphaBeta Money, BCU, G&C Mutual Bank, Pepper, and Sydney Mutual Bank.

Even though these lengthier loans 35 to 40 year loans do exist on the market, they are not overwhelmingly popular, as the extra interest you pay compared to a 30-year loan can be over $100,000 or more.

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 are the responsibilities of a mortgage broker?

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

In Australia, mortgage brokers are required by law to carry an Australian Credit License (ACL) if they offer credit assistance services. Which is the legal term for guidance regarding the different kinds of credit offered by lenders, including home loan mortgages. They may not need this license if they are working for an aggregator, for instance, as a franchisee. In both these situations, they need to comply with the regulations laid down by the Australian Securities and Investments Commission (ASIC).

These regulations, which are stipulated by Australian legislation, require mortgage brokers to comply with what are called “responsible lending” and “best interest” obligations. Responsible lending obligations mean brokers have to suggest “suitable” home loans. This means loans that you can easily qualify for,  actually meet your needs, and don’t prove unnecessarily challenging for you.

Starting 1 January 2021, mortgage brokers must comply with best interest obligations in addition to responsible lending obligations. These require mortgage brokers to act in the best interest of their customers and also requires them to prioritise their customers’ interests over their own. For instance, a mortgage broker may not recommend a lender who gives them a commission if that lender’s home loan offer does not benefit that particular customer.