Key Takeaway
Investment loans are available for Australians with bad credit through non-conforming lenders, but lenders apply stricter LVR requirements (often 70–75% max) and rates 2–4% above mainstream investment loan rates. Given the long-term nature of property investment, the cumulative interest cost of a bad credit rate is enormous. If your credit issues stem from unlawfully listed defaults under the [Privacy Act 1988](https://www.australiancreditsolutions.com.au/blog-details/how-to-dispute-credit-report-error-australia), professional removal before applying is almost always worth the 30–90 day wait.
Quick Answer: Investment loans are available for Australians with bad credit through non-conforming lenders, but lenders apply stricter LVR requirements (often 70–75% max) and rates 2–4% above mainstream investment loan rates. Given the long-term nature of property investment, the cumulative interest cost of a bad credit rate is enormous. If your credit issues stem from unlawfully listed defaults under the Privacy Act 1988, professional removal before applying is almost always worth the 30–90 day wait.
Property investment is a long game. The rate you lock in at entry compounds across years of repayments and decades of hold time. Getting it right at the start — which means not accepting an inflated rate when credit repair could avoid it — matters more for investment property than almost any other loan type. For more detail, see our guide on investment loan with bad credit australia: is it possible?.
How Bad Credit Affects Investment Loan Applications
Lenders assess investment loan applications with greater scrutiny than owner-occupier loans. The serviceability assessment includes rental income projections, existing debt commitments, and the credit profile of the borrower. An active default raises risk flags on all three fronts — it suggests financial stress, potentially reduced serviceability, and lender risk.
| Borrower Profile | Available Rate | Max LVR | Product Access |
|---|---|---|---|
| Clean credit, stable income | 6.3–7.0% | 90% | All mainstream lenders |
| Minor issues, strong income | 6.8–7.8% | 85% | Most lenders, broker recommended |
| One active default | 8.5–10.5% | 75–80% | Non-conforming lenders only |
| Multiple defaults | 10.5–13.0%+ | 65–70% | Specialist lenders, case by case |
Real Case Study: Aaron, Adelaide — Investment Loan After 41-Day Credit Repair
Aaron, 47, a small business owner from Adelaide, had been watching a development site in his suburb for two years. When it finally came to market, he was ready — except for a $790 default on his credit file from a telecommunications company, listed three years earlier. Australian Credit Solutions offers how we help Australians get home loan ready.
The telco had listed the default while a TIO complaint Aaron had lodged was under formal investigation. Listing during an active TIO complaint is a direct breach of the Credit Reporting Code.
ACS challenged the listing. Removed in 26 days. Aaron's Equifax score moved from 488 to 706.
His broker sourced an investment loan at 7.1% p.a. with 80% LVR. Before the repair, the best available quote had been 10.8% p.a. with a 70% LVR requirement — which would have required an additional $80,000 deposit contribution.
Result: Aaron's Equifax score moved from 488 to 706 in 26 days. The rate difference of 3.7% on a $620,000 investment loan over 25 years: approximately $284,000 in additional interest he didn't pay. The higher LVR also meant he retained $80,000 of capital for the deposit on a second property. He waited 41 days from first contacting ACS to unconditional approval. The saving of approximately $284,000 in total interest over 25 years — plus retention of $80,000 capital — made the 41-day wait clearly worthwhile. He only paid when we succeeded. Subject to individual assessment; results may vary.
Steps to Pursue an Investment Loan With Bad Credit
- Get all three credit reports — Equifax, Experian, Illion
- Identify every negative entry and its listing date
- Get a free ACS assessment — removable defaults change investment lending access dramatically
- If removable, pursue removal first — the LVR and rate improvement is often worth more than speed
- If urgent, engage a specialist commercial/investment broker
Key Differences Between Investment and Owner-Occupier Bad Credit Loans
Investment loans with bad credit attract additional conditions beyond the standard bad credit penalties: lower maximum LVR (often 70–75% vs 80% for owner-occupier), higher assessment rates for serviceability calculations, stricter income verification, and in some cases, limitation to interest-only repayments during the initial term.
The deposit or equity requirement is the critical practical issue — a 70% LVR requirement means you need 30% of the purchase price as a deposit, significantly more than mainstream investment lending.
Frequently Asked Questions
Can I get an investment property loan with bad credit in Australia? Yes — non-conforming lenders offer investment loans to borrowers with impaired credit files. The trade-offs are higher rates and stricter LVR requirements. For long-term investment property, where the rate compounds over decades, fixing credit file issues before applying is almost always the better financial strategy. For more detail, see our guide on investment loan with bad credit australia: what's possible in 2026?.
What LVR can I borrow at with bad credit for investment property? Non-conforming lenders for investment property typically cap at 75–80% LVR for minor credit issues and 65–70% LVR for multiple defaults. This means needing 20–35% of the purchase price as a deposit — compared to 10–20% for mainstream investment lending.
Does rental income help my investment loan application with bad credit? Yes — lenders include projected rental income in their serviceability calculations, which can offset some income requirements. However, with bad credit, lenders typically apply a conservative assessment rate (they might count only 75% of rental income), and a strong rental yield doesn't overcome an active default at mainstream lenders.
Is it better to buy owner-occupier first, then invest, when I have bad credit? For some borrowers, purchasing an owner-occupier property first — which typically has lower rates and higher LVR availability — and then refinancing to access equity for investment purposes can be a more accessible pathway. This depends heavily on individual circumstances and requires specific financial advice.
Can I use equity in my home for an investment loan with bad credit? If you have sufficient equity in an existing property, some lenders will consider a top-up or line of credit for investment purposes even with an impaired credit file — particularly if the existing loan is performing well. The bad credit rate still applies, but the equity security reduces LVR concerns.
Don't Let a Removable Default Cost You Decades of Higher Repayments
A free assessment from Australian Credit Solutions takes 24 hours and could determine whether the credit entry blocking mainstream investment lending can be removed before you apply.
Australian Credit Solutions — ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild. No Win No Fee. 98% success rate on accepted cases. Award winner 2022, 2023, 2024.
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This article provides general information only and does not constitute legal or financial advice. Australian Credit Solutions Pty Ltd holds ASIC ACL 532003. Results may vary.
Related reading: Bad Credit Home Loans → | Default Removal Services →
Free credit reports: equifax.com.au. Verify ASIC licences: asic.gov.au.
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