Key Takeaway
Yes, you can get a mortgage with bad credit in Australia through non-conforming lenders like Pepper Money, La Trobe Financial, Bluestone, and Resimac. But rates run 2–4% above mainstream, adding $200,000–$400,000 in interest on a typical loan. If your defaults were listed in breach of the [Privacy Act 1988](https://www.australiancreditsolutions.com.au/blog-details/how-to-dispute-credit-report-error-australia) — which is surprisingly common — professional removal (typically 30–90 days, subject to the creditor's response) can unlock mainstream lending and remove that premium.
Quick Answer: Yes, you can get a mortgage with bad credit in Australia through non-conforming lenders like Pepper Money, La Trobe Financial, Bluestone, and Resimac. But rates run 2–4% above mainstream, adding $200,000–$400,000 in interest on a typical loan. If your defaults were listed in breach of the Privacy Act 1988 — which is surprisingly common — professional removal (typically 30–90 days, subject to the creditor's response) can unlock mainstream lending and remove that premium.
📊 Try it: Use our free mortgage repayment calculator to estimate repayments and see what a higher bad-credit rate really costs over the loan.
A bad credit mortgage is real — specialist lenders genuinely do approve applications that the big four banks automatically decline. The question worth asking before you sign isn't whether it's possible. It's whether it's your best option.
For many Australians, the answer is no — because the defaults blocking their mainstream approval were listed unlawfully and can be removed. For others, a specialist mortgage is the right move now with a clear path to refinancing later. This guide covers both paths clearly.
Who Offers Mortgages With Bad Credit in Australia?
Australia has an active non-conforming lending market with several specialist lenders who build products specifically for impaired credit applicants:
| Lender | Speciality | Typical Rate Premium |
|---|---|---|
| Pepper Money | Defaults, discharged bankruptcy | +1.5–3.5% above standard |
| La Trobe Financial | Adverse credit, self-employed | +1.5–3.0% above standard |
| Bluestone Mortgages | Defaults, CCJs | +2.0–4.0% above standard |
| Resimac | Impaired credit, non-standard income | +1.5–3.5% above standard |
| Liberty Financial | Flexible credit assessment | +1.0–3.0% above standard |
These lenders assess beyond the credit score — income stability, equity position, employment history, and the nature of the credit event all factor in. A default from a redundancy three years ago is viewed differently from a pattern of ongoing defaults.
The True Cost of a Bad Credit Mortgage
| Loan | Standard Rate | Non-Conforming Rate | Extra Cost (30yr) |
|---|---|---|---|
| $450,000 | 6.4% | 9.2% | ~$270,000 |
| $600,000 | 6.4% | 9.2% | ~$360,000 |
| $750,000 | 6.4% | 9.2% | ~$450,000 |
Even if you refinance after two or three years, the early repayments at a higher rate represent a real and substantial cost. Run the numbers before you commit. If you need professional help, explore our credit repair for home loan approval service.
Steps Before Applying for a Bad Credit Mortgage
- Pull all three credit reports — Equifax, Experian, Illion
- Identify every negative entry on the file
- Get a free ACS assessment within 24 hours
- If removal viable — pursue before applying anywhere
- If not viable — engage a specialist mortgage broker
- Prepare documentation: 2yr tax returns, 6mo bank statements, deposit evidence
Should You Apply Now or Fix First?
Apply now if: the purchase is genuinely time-sensitive, the default is lawfully listed, or the specialist rate is still affordable within your long-term plan.
Fix first if: there's any flexibility in your timeline and there's any possibility the default was listed unlawfully. A free assessment answers that question within 24 hours at no cost.
Frequently Asked Questions
Can I get a mortgage in Australia with active defaults? Yes — through non-conforming specialist lenders who assess impaired credit applications. Major banks will typically decline automatically. The rate premium on specialist mortgages is significant, so it's worth first checking whether any defaults can be removed under the Privacy Act 1988 before committing.
How much deposit do I need for a bad credit mortgage in Australia? Non-conforming lenders typically require 20% (80% LVR or lower) for impaired credit applicants, compared to the 5–10% some mainstream lenders accept for clean-credit borrowers. A larger deposit partially offsets the lender's risk from your credit history.
Can I refinance from a bad credit mortgage to a mainstream one later? Yes — and this is a common strategy. Obtain specialist financing now, spend 12–24 months re-establishing your credit profile and demonstrating repayment history, then refinance to mainstream lending. Get a clear timeline from a broker before committing.
Do non-conforming lenders check credit scores? Yes — they access the same credit bureau data as mainstream lenders. The difference is they apply manual assessment rather than automatic decline rules, so a human reviews your full situation. Having a detailed explanation of your credit events and evidence of changed circumstances strengthens your application.
Is it legal for credit repair companies to challenge mortgage-blocking defaults? Yes — ASIC-licensed credit repair companies are legally permitted to dispute inaccurate or unlawfully listed credit file entries on your behalf under the Privacy Act 1988. See more about default removal services →
How long does a bad credit mortgage take to approve in Australia? Non-conforming lenders typically take 3–7 business days for initial assessment, with full approval in 2–4 weeks. This is slightly longer than mainstream lenders due to the manual assessment process. Factor this into your purchase timeline.
Find Out If Your Mortgage Blocker Can Be Removed
Before accepting a specialist rate or giving up on property ownership, get a no-obligation assessment. It's free, takes minutes, and could be worth hundreds of thousands of dollars.
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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 → | Can I Get a Home Loan With Bad Credit? →
Verify ASIC licences at asic.gov.au. Free credit reports at equifax.com.au.
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