Getting a home loan with a bad credit score
Don't let your low credit score hold you back. Life can throw unexpected hurdles; from missing a few bills, to a full-on default or even bankruptcy - sometimes these things are just out of our control. And that’s perfectly okay. But even after you get your finances back on track, a bad credit history can limit your options when you urgently need a loan and some banks can hold this against you for years to come. As a non-bank lender we see things differently.
We try and offer a way forward for each of our customers, regardless of what’s happened in the past.
Talk to us about your situation and we’ll see how we can help with your home loan application if you have a poor credit history.
Why Pepper Money?
We're fast: Credit decisions within 2 business days
We're flexible: Multiple loan options, if we can help, we will
We're accessible: We’re here to talk through your situation
- 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
- Got a few blips on your credit report
What’s a flexible credit assessment?
We don’t just look at the boxes on your home loan application. We make the effort to get to know you – the person completing the application. We ask the questions that matter so we can understand the reasons behind any issues on your credit report, which allows us to make an informed decision and work out an interest rate based on your situation. The loan amount is worked out using a range of factors (including your property goals, income and financial details), while ensuring your requirements and objectives are met.
It’s this flexible approach that helps more Aussies achieve their dreams of buying their new home with us.
See what your repayments~ might look like
Your Loan, Your Rate
Discover our flexible approach to home loans. We look at a range of factors to provide eligible borrowers with an interest rate estimateˇ. Find out where you stand today.
Interest options to suit you
Let's crunch those numbers
Our calculators are here to help you along your journey. From working out stamp duty to helping reach those savings targets.
Borrowing Power
Stamp Duty
Mortgage Repayments
Savings Goals
What other credit impaired borrowers are asking
There's no point re-inventing the wheel. Here's what other savvy home buyers are frequently asking us. If you're still stuck for help, then why not check out all of our home loan FAQs.
What is a bad credit?
Also known as adverse credit, bad credit occurs when you’ve had a history of not keeping up with payments on your credit agreements. This then impacts your ability to get approval for a home loan or other new lines of credit.
Many lenders consider borrowers with a bad credit history to be a high lending risk, as they’re concerned with the borrower’s ability to commit to regular repayments on a new loan.
Can I get a home loan with a bad credit score?
There are always options available – we don’t believe anyone should have to give up on their dreams of buying a house. We’ve designed home loan options especially for people that have had debt issues, which can help get you back onto the property ladder.
If you’ve had issues on your credit report, then it’s important to keep your payments up-to-date and understand what happened in the past. To help with this, read our Real Life Guide to Your Credit Report.
What is my credit score?
Your credit score is a number calculated by a Credit Reporting Body (CRB) and it’s based on an analysis of the credit file they create about you. It's a file containing the collection of credit-related data they gather about you and your financial history. It is reported as a history and summarised as an overall total score. Your score may be used by some lenders to decide whether to lend you money, how much they will lend you and what interest rate will be offered to you. In Australia, getting a below average credit score means you could get higher than usual interest rates.
Your credit score is rated on a five-point scale (excellent, very good, good, average and below average).
Excellent - you are highly unlikely to have any adverse events – like defaults or arrears – harming your credit score in the next 12 months
Very good - you are unlikely to have an adverse event in the next 12 months
Good - you are less likely to experience an adverse event on your credit report in the next year
Average - you are likely to experience an adverse event in the next year
Below average - you are more likely to have an adverse event being listed on your credit report in the next year
To apply for a home loan, you’ll need to provide documents to verify your identity, employment, and financial position.
To prove your identity:
-
Australian passport
or
-
International passport showing a valid Australian permanent residency visa
To prove your deposit, you’ll need to provide the following (depending on where the funds originated from):
- 3 months’ bank statements demonstrating genuine savings
- Share certificate or dividend statement for any public listed company
- Gift letters for non-repayable gifts from family
- Contract of sale or settlement statement for proceeds of a sale of another property
To prove your income:
For PAYG applicants you’ll need two recent payslips plus one of the following:
• Most recent group certificate
• Most recent notice of assessment
• Current letter of employment
• Bank statements - to confirm your last 3 months of salary
For Self-Employed applicants, the required documents vary depending on how long you’ve been self-employed.
At least 6 months:
You’ll need to be able to show at least 6 months of GST and ABN registration and provide declaration of financial position, as well as one of the following: 6 months’ business bank statements, or 6 months’ BAS or Pepper Money accountant’s letter (not accepted if ABN registered for < 12 months, on loan sizes > $1.5m or on Plus).
Over 2 years:
Last 2 years’ tax returns and notices of assessments, or
Last 2 years’ financial statements executed by a registered tax agent or accountant
While a high credit score might help you get a low interest rate with the banks, credit history issues or a lower credit score is something we specialise in as a non-bank. Non-bank lending options, like ours at Pepper Money is how it may still be possible to apply for a home loan in Australia with a less-than-perfect credit score. We take a real life approach and look beyond just your credit score to see what we can do to help.
Talk to a Lending Specialist about your situation. We're here to help.
On some of our loan options, we offer finance up to 95% of the purchase price, meaning you can start to look at buying a house once you've saved at least 5% of the purchase price. The deposit amount needed may also depend on the property and area you’re looking at purchasing.
Remember, you’ll also need funds to be able to cover any loan fees, stamp duty and other government charges. These can’t be added to your home loan balance.
The interest rate offered, and fees and charges will depend on our assessment of a number of factors at the time of application including:
- The amount of your deposit or existing equity (if refinancing)
- Nature of the security property (or the property you have equity in if refinancing)
- Loan to value ratio (LVR)
- Your income
- Credit history
- Any assets you own
- Any liabilities or credit obligations
- Chosen repayment type – paying off interest-only, or principal and interest
- The purpose of the loan – if it’s for an owner-occupier or investment property
To get an indicative interest rateˇ, you can start by using our online borrowing power calculator, or speak to one of our Lending Specialists on 137 377.
Different lenders charge different upfront and ongoing monthly fees, which should be factored in when saving your deposit. Some of these can be added to your loan balance, while others will need to be paid upfront – fees include establishments or application fees, and risk or mortgage insurance fees. Other smaller fees will be added to your balance each month.
You can view a summary of our home loan fees.
You’ll also need to pay solicitor fees along with local and state government taxes and levies. These can’t be added to your house loan balance and are usually paid upon settlement.
We’re one of Australia's leading non-bank lenders!
We were established way back in 2000 to help Australians achieve their financial dreams by providing flexible financial loan options that could factor in the ups and downs of real life. Since then, we’ve become one of the largest, most trusted, and award-winning non-bank lenders in Australia and New Zealand.
Your Pepper Money Home Loan Journey – from application to actual settlement – can take up to six weeks – this is the typical timeframe for a home purchase, however, the process may be quicker if all the necessary documentation is provided sooner.
Delays in decisions are most commonly caused by incorrect or missing documentation.
Learn more about the Pepper Money Home Loan application process or for more information speak to a Lending Specialist on 137 377.
Our home loan borrowing capacity calculator asks a few easy questions (personal and financial) to calculate an estimate of how much you may be able to borrow with us at Pepper Money. After finding out how much you could potentially borrow, you can then either speak to a Lending Specialist about your situation or continue to get an indicative interest rateˇ online.
Some of the big banks may turn applicants away if they have a less-than-perfect credit score. Alternative lenders, such as Pepper Money, look beyond a credit score to understand a customer’s full financial situation before making a decision. This is achieved by taking a more holistic approach than traditional lenders - speaking with customers to understand how any credit problems occurred and considering each borrower’s individual needs and circumstances.
If you’d like to learn more about our home loan options for bad credit, then speak with one of our friendly lending specialists on 137 377
Resources to help with credit issues
It can be tough to recover from a credit event. We've put some resources together to help you get back on-track.
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The important legal bits
Information and interest rates are correct as of 8 April 2024 and subject to change at any time.
Information provided is factual information only, and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licenced financial or tax adviser.
All applications are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply. Promotions are subject to change and may be varied or withdrawn at any time. Applications submitted after the Promotion period will be offered the current interest rates then applicable.
*Our interest rates:
Pepper Money variable interest rates range from 6.84%p.a. - 12.19% p.a. (Comparison rates range from 7.02%p.a. - 12.34%p.a.^)
Pepper Money 2-year fixed interest rates range from 6.84%p.a. - 12.19%p.a (Comparison rates range from 7.02%p.a. - 12.27%p.a.^).
The actual interest rate will depend on the borrower’s circumstances and the information verified during the loan application assessment.
^Comparison rate is calculated on a secured loan of $150,000 for a term of 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
1Variable interest rate promotion (Promotion) applies to select LVRs for new home loan applications submitted between 12:00 am AEST 8 April 2024 and 11:59 pm AEST 27 June 2024.
2Pepper Money’s fixed interest rate promotion is only available for new home loan applications not previously submitted. Applications must be submitted between 12:00 am AEST 8 April 2024 until 11:59 pm AEST 27 June 2024. To lock in the interest rate at Final Approval, a fixed rate authority lock form must be submitted (fees apply#).
#There is a non-refundable, minimum fee of $750 per home loan application payable at settlement to lock in a fixed interest rate for 90 days. For home loan balances greater than $500,000, the rate lock fee is 0.15% of the fixed interest rate loan balance at settlement. For example, for a fixed rate loan amount of $600,000 the rate lock fee will be $600,000 x 0.15% = $900. The lesser of the fixed interest rate at settlement or the applicable locked in fixed interest rate will be applied at settlement. The rate lock fee will be charged at settlement even if interest rates decrease after the rate lock request has been approved.
˅An indicative interest rate and estimated repayments is not a formal approval for a loan and financial commitments must not be entered into based on it. It is not a suggestion or recommendation of any particular loan product. It is a guide only based on the limited information provided and the credit score obtained. The actual interest rate and fees will depend on the borrower’s circumstances and the information verified during the loan application assessment.
~The results of the home loan repayment calculator are based on information you have provided in the calculator including a selected interest rate, loan term and loan amount and is to be used as a guide only. The interest rates do not reflect true interest rates and the formula used for the purpose of calculating estimated home loan repayments is based on the assumption that interest rates remain constant for the chosen loan term. The output of the calculator is subject to the assumptions in the calculator (see 'about this calculator') and subject to change. It does not constitute a quote, pre-qualification, approval for credit or an offer for credit and you should not enter commitments based on it. Your interest rate, repayments and interest payable will be different when you complete a full application and we capture all details relevant to our responsible lending assessment. The results of this calculator does not take into account loan setup or establishment or monthly administration fees nor government, statutory or lenders fees, which may be applicable from time to time. Calculator by Widget Works.
+Visa Debit card is issued by Indue Limited ABN 97 087 822 464 and distributed by Pepper Finance Corporation Limited ACN 094 317 647 and/or through Pepper Money accredited mortgage brokers. Refer to the Conditions of Use and Target Market Determination (TMD).
