Lenders classify a mortgage in arrears as bad credit. Therefore, by the nature of the mortgage in arrears refinance, they will accept other bad credit. However, as the severity of the bad credit increases so too does the interest rate; and the reduction in the Loan Value Ratio (LVR).
Types of acceptable bad credit are:
Firstly, low credit scores may prevent traditional finance; however, non-conforming lenders accept low scores.
Secondly, credit defaults and court judgements can be acceptable. However, older credit file listings have less effect on the loan interest rate and LVR.
In some cases, discharged bankruptcy would be acceptable. However, older bankruptcies would provide better loan pricing.
Also, where you were a director of a company forced into liquidation. Indeed, bad debt would have caused the company closure.
Finally, being behind on your council land rates can prevent traditional bank approvals. Therefore, council land rates arrears are bad debt arrears.
Keep in mind, as the severity of the bad credit increases so too is the reduction in the lenders’ appetite for risk. Consequently, a specialist mortgage advisor can assist with your mortgage in arrears; and bad credit advice for your loan application.