What if I have a bad credit history or outstanding debts?
A mark on your credit file is not a verdict on whether you can borrow. It is a policy question — and policy varies enormously from one lender to the next. The banks tend to read credit history conservatively, because their funding and their risk appetite are built that way. Other lenders price and structure for exactly these circumstances. So the real question is rarely "can I get a home loan with bad credit"; it is "which lender's policy fits the history I actually have, and how should the loan be structured around it." That is the part worth getting right.
Life gets in the way of a plan, and a default, a missed repayment or a past hardship does not erase your ability to build wealth through property. What it changes is the path — the lender, the loan-to-value ratio, the rate, and the order you do things in.
What actually sits on your credit file
Most adverse credit shows up on your Equifax credit file, and not every mark carries the same weight. The ones that most often shape borrowing include:
- Mortgage arrears. Many lenders will not refinance a loan if you have missed a repayment in the last 24 months. Policies differ, so a miss with one lender is not a miss everywhere.
- Defaults, judgments and bankruptcy. Defaults, court writs, a Part IX debt agreement or a high number of recent credit inquiries can all cause a lender to question how their product fits your circumstances.
- Prior lender history. Banks have long memories of their own former customers. A different lender is often the cleaner path rather than returning to one that already holds a history with you.
- Unpaid bills. Council rates or tax debts may not appear on the credit file immediately, but they tend to surface in the supporting documents, so it is better to raise them early than have them found.
- Company exposure. If you are the director of a company in financial difficulty, that can flow through to your personal credit history.
- Being over-committed. Clearing personal debt before you apply lifts your borrowing capacity and strengthens how the file reads.
How borrowing usually works from here
Borrowing up to 80% of a property's value is generally workable regardless of credit history — that is the band where most lenders have room to move. Above that, it depends on the detail. A minor default under $500 may still sit inside a mainstream lender's policy at a higher LVR; larger or more recent events usually point toward specialist lenders who assess and price the risk deliberately rather than declining it outright.
These specialist products carry higher rates and fewer features than a prime home loan, and that is the trade for access. The structure matters here: the loan should be built so it can be refinanced cleanly once your file improves, not locked into terms that trap you in the higher rate.
Time is the lever most people miss
Your circumstances are not fixed. Defaults age, balances clear, and conduct on a current loan rebuilds a file faster than most people expect. The discipline is to borrow well now on terms designed to be exited, then move to a stronger product the moment your position qualifies for one — rather than accepting the first approval and forgetting about it. A short conversation early is often worth more than a perfect application later: there are frequently steps you can take now that change which lenders will consider you in six or twelve months.
If a past credit event is the thing standing between you and a property plan, it is worth mapping properly — which marks matter, which lenders fit, and how to structure the borrowing so today's loan does not become tomorrow's problem. Book a strategy session and we will work through where you genuinely stand.
General information only — not personal financial product or credit advice. Lending is subject to each lender's policy, your full circumstances and responsible-lending assessment. AeFin is an Australian Credit Representative (CR 464548) of Finsure (ACL 384704).