Defaults, late payments, discharged bankruptcy
Getting a home loan after a credit default or bankruptcy in Melbourne
A default on your credit file, a run of late payments, or a bankruptcy that has since been discharged all make a home loan harder. None of them make it impossible. Mainstream banks have firm rules and will often say no. A group of specialist lenders assess the whole story instead, usually at a higher rate and with a larger deposit. The job is working out which category you are in, and what the path back to a mainstream loan looks like.
How credit history actually works
What is on your file, and for how long
A default stays on your credit file for five years from the date it is listed. Paying it does not remove it; it changes the status from unpaid to paid, which lenders do care about, but the listing runs its full term. Late payments show under comprehensive credit reporting as repayment history for two years. A bankruptcy stays for five years from the date it began or two years from discharge, whichever is later, and your name sits permanently on the National Personal Insolvency Index.
Mainstream lenders generally want a clean file, or at most small, old, paid defaults with a good explanation. Most also want you to be at least two years discharged from bankruptcy. Specialist lenders are different: some will consider an application the day after discharge, and many will look past paid or unpaid defaults if the rest of the picture is sound.
The trade-off is cost. Specialist loans carry higher interest and fees, and they usually want more deposit. The sensible way to use one is as a bridge: buy or refinance now, keep the repayments perfect, and move to a mainstream lender once the listings age off. We plan that second step at the same time as the first.
- We read your credit file with you first, so there are no surprises and no pointless applications
- Honest guidance on whether a mainstream lender is realistic now, or whether a specialist bridge makes sense
- A written plan for getting back to a mainstream rate as the listings age off
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Twenty years inside Australian banking, including senior roles at ANZ, before starting Exceed Finance. Plain answers, no pressure.
The numbers that matter
At a glance
General information only. Lender policies change and your full situation has to be assessed before any lender will confirm what they will do. Our service is free to you on residential home loans and everything is disclosed in writing.
Where we can usually help most
The situations that come up again and again
One old default, otherwise clean
A paid phone or utility default from years ago, with a clear explanation, is accepted by more mainstream lenders than people expect. Often no specialist lender is needed.
Missed payments during a hard year
Illness, job loss, separation. Repayment history shows for two years. If the last twelve months are clean, the options widen considerably.
Discharged bankruptcy
Under two years out, specialist lenders only, with a larger deposit. Past two years with clean conduct, some mainstream lenders come back into play.
Refinancing out of a specialist loan
You took the specialist loan to get in. The listings have aged, the repayments have been perfect. Time to move. This is the happy ending and we do it often.
Where our clients are
Across Melbourne, and Australia-wide
We are based in Dandenong South and a lot of our clients are across Melbourne's south-east, but everything can be done by phone, video and secure upload, so we help clients anywhere in Australia.
Other situations we write about:
Simple from start to finish
How it works
Free chat
We work out your goals and what you can actually borrow.
We compare
We search 35+ lenders and shortlist the ones whose policy fits your situation.
We apply
We package and submit your application, and chase it for you.
Settlement
We see it through to approval, and stay in touch afterwards.
Common questions
Questions we get asked a lot
How long does a default stay on my credit file in Australia?
Five years from the date it was listed, under the Privacy Act. Paying the debt does not remove it; it changes the listing to a paid default, which is better in a lender's eyes but still visible. Repayment history information, meaning late or missed payments on existing accounts, is shown for two years.
Can I get a home loan after bankruptcy?
Once you are discharged, yes, though the lender pool depends on timing. Most mainstream banks want you at least two years discharged with clean conduct since. Some specialist lenders will consider an application from one day after discharge, generally with a deposit of 20 percent or more and a higher interest rate. The reason for the bankruptcy, your income now and how your accounts have been run since all matter.
Will a specialist lender cost me a lot more?
It costs more, yes. Rates are higher and there are usually establishment and risk fees. The way to think about it is as a short-term bridge, not a permanent home. We set the loan up so that once the listings age off and you have a clean run of repayments, refinancing to a mainstream lender is the natural next step. Your full situation has to be assessed before any lender will confirm what they would offer.
Should I pay off my defaults before applying?
Usually yes. A paid default is treated more kindly than an unpaid one by almost every lender, and some mainstream lenders will only consider paid defaults. It will not remove the listing, but it changes what the listing says. If the default is disputed or was listed incorrectly, that is a different conversation and worth having before anything else.
Does checking my options with you go on my credit file?
No. Nothing we do together involves a credit enquiry until an application is actually lodged with a lender, and that only happens when you have decided to go ahead. If you like, we will go through your own free credit report with you first, so we both know exactly what a lender is going to see.
Do you charge for this?
Our service is free to you on residential home loans. Everything is disclosed in writing before you commit to anything, and as a licensed credit representative we operate under Best Interests Duty, which legally requires us to act in your interests rather than our own.
Will talking to you affect my credit score?
No. A conversation with us, and the work we do comparing lenders, involves no credit check. A credit enquiry only happens when an actual application is lodged with a lender, and we do not lodge anything until you have chosen to go ahead. The point of doing the work first is so that the application that does go in is the right one.
Let's look at the file together
Bring your credit report or we will help you get it. You will leave knowing whether a mainstream lender is realistic now, and if not, what the route back looks like. Free, no obligation.