How hard is it to refinance from bad credit lender ?

If you get a loan with a bad credit lender like pepper and have a bankruptcy discharged no longer on credit file how hard will it be to re-finance to a lender with a decent IR ? Will you need to wait until you have 20% equity or will X months of repayment history be sufficient ?

 

It will depend on the circumstances. Potentially easy, but will need 80% LVR or less generally

 

What type of bad credit is it?

Is it still on your credit file?

Can you engage in a Credit repair company to fix it up the bad credit?

 

What about a guarantor so no lmi ?

Do banks check the npii for homeloans ?

Is there a way to do the loan of wife's name ?

 

If I can get a guarantor can I avoid LMI and therefore get a loan with a major lender ? Will the bankruptcy still present an issue ? Will they know about it as it is not on the credit report any longer.

 

Yes you could use a parental guarantee to avoid the LMI/Deposit issue.

They do check the NPII

If you are not an owner and the wife is the wife could be the sole borrower, but the serviceability would be based on her income. If you go on, the bankruptcy would be an issue

The bankruptcy will always be an issue, but it is still possible to get finance.

 

Okay thanks a lot for taking the time to reply.

What issues will it cause ?

If there is a 20% deposit or guarantor will finance be available from a mainstream lender at normal rates ?

What about the two first home buyer deposit schemes would they be open to bankrupts (no longer on credit file).

 

a bankrupt is someone who once didn't pay their debts. They have a track record so will be trusted less than some potential borrower who has never been bankrupt.

It is possible to get 'normal' rates but it will depend on the circumstances.

bankruptcy has no affect on first home buyer deposit schemes to my knowledge.

 

Thank you for your responses unfortunately I have more questions.

On the NHFIC first home loan deposit scheme:
The government has the first home loan deposit scheme NHFIC policy which would let someone borrow up to 850k for a new house with a 5% deposit no LMI. It says though, that you need to pass the banks credit criteria. Do you know if a bankruptcy would cause that to fail ? Also do you know what effect the bankruptcy might have on the rate you'd get under this scheme would it still be higher ?

Do you know if the situation occurs that you no longer wish to live in that house you bought for example moving interstate for a job is it allowed to rent the house out which you bought under the scheme or would need to wait for the guarantee to expires ? What if you need to move but can't sell it due to negative equity are you allowed to rent the place out ? I am imagining with a new build there is a real possibility of negative equity in the short term.

Bank Policy:
If the banks do check the NPII and do know about the bankruptcy is it their policy that a 20% deposit is required or is this related to LMI ? I heard banks will lend to ex bankrupts without it on their credit file, but it is the case that the LMI providers won't insure ex bankrupts. This leads into the next question of getting a guarantee.

Guarantee:
If I get a guarantee will they still do an NPII check ? What is the point to get a guarantor if they're just going to do an NPII search and question the loan anyway ? In what way would a guarantee help ?

Leaving Australia:
I have the option of moving to another country do you know if the bankruptcy would follow me? As hard as this option is it might be a way forward.

Regarding pepper:
Do you think this is a good option or am I better off seeking a way to get in through a traditional lender ?

 

1. don't know
2. it will vary from lender to lender - not all lenders are banks. I don't think LMI would approve a former bankrupt, but have not checked
3. I would expect the lender will still check
4. you will always be a former bankrupt. no running away from it. But will it be something the lenders in the other country ask? I don't know. Probably unlikely they will check.
5. nothing wrong with pepper