Investment Loan With Bad Credit Australia — Is It Possible? (2026)

Quick Answer: Getting an investment property loan with bad credit in Australia is possible — non-conforming lenders like Pepper Money, La Trobe, and Bluestone offer investment loans to borrowers with impaired credit files. But lender requirements are stricter for investment properties than owner-occupied, and rates are higher. If your credit issues stem from defaults listed unlawfully under the Privacy Act 1988, removing them first typically takes 30–90 days and can unlock mainstream investment lending at rates that meaningfully improve your return on investment.

Property investment has long been a wealth-building strategy for Australians — but bad credit can derail plans before they start. If you've been building your investment strategy while a default sits on your file, you're not alone, and you're not necessarily stuck.

How Investment Lending Differs From Owner-Occupied

Lenders assess investment loans more conservatively than owner-occupied loans. The reasons: rental income isn't as reliable as employment income, investors are considered more likely to walk away from a property in difficulty, and APRA has introduced specific controls on investor lending since 2017.

This means: higher rates for investment loans than owner-occupied at the same credit quality, lower maximum LVRs (typically 80% for clean credit, often 60–70% for impaired credit), and stricter income assessment (only 70–80% of rental income is counted for serviceability).

For bad credit investment borrowers, these stricter standards stack on top of the credit risk premium — making the total rate cost even more significant than for owner-occupied borrowing.

Investment Loan Options With Bad Credit

For most bad-credit investors, the question isn't just "can I get approved?" — it's "does the loan make sense at this rate?" An investment yielding 5% gross returns that costs 12% in financing is cash-flow negative from day one. The maths need to stack before you commit.

Real Case Study: Sandra, Sunshine Coast — Waited 52 Days, Investment ROI Transformed

Sandra, 51, a small business owner from the Sunshine Coast, had been planning to purchase an investment unit for three years. She'd saved a 30% deposit and identified the property. Her only barrier was a $540 energy company default listed two years earlier — which was causing automatic declines from mainstream investment lenders.

The non-conforming approval she'd received was at 11.4% p.a. — a rate that made the investment barely cash-flow neutral even with a strong rental yield.

During her ACS assessment, we found the energy company had listed the default without first sending the Section 21D notice to Sandra's current business address — they'd used a residential address that was two years out of date. The Privacy Act 1988 requires reasonable steps to locate a current address before listing.

We challenged the listing. The default was removed in 34 days.

Sandra's Equifax score moved from 491 to 698. Her mortgage broker sourced a mainstream investment loan at 7.1% p.a.

Result: Sandra's score moved from 491 to 698 in 34 days. On her $480,000 investment loan, the difference between 11.4% and 7.1% p.a. over 25 years was approximately $290,000 in additional interest — fundamentally changing the economics of the investment. She waited 52 days from first contact to unconditional approval. She paid nothing until we succeeded. Subject to individual assessment; results may vary.

Factors Lenders Assess for Investment Loans With Bad Credit

Beyond the credit score and default status, non-conforming lenders assess investment loan applications on: the strength of the rental income (location, vacancy rates, property type), the borrower's overall asset position, the deposit size (30%+ makes a significant difference), employment or business income stability, the total debt serviceability picture, and the number and recency of defaults.

Strong positions in these areas can sometimes partially offset the impact of credit impairment — giving you more options and potentially better rates within the non-conforming space.

Frequently Asked Questions

Can I get an investment property loan with a default in Australia? Yes — through non-conforming lenders who specifically cater to investors with impaired credit files. The conditions are stricter than for clean-credit investors: higher rates, lower maximum LVRs, and more conservative rental income assessments. Before accepting a non-conforming investment rate, it's worth assessing whether the default can be removed professionally — the rate difference significantly affects investment returns.

What deposit do I need for an investment loan with bad credit in Australia? Most non-conforming lenders require 20–30% deposit (70–80% LVR) for investment properties with an impaired credit file — significantly more than the 10–20% that mainstream investment lenders accept for clean-credit borrowers. A larger deposit reduces the lender's risk and can improve your rate within the non-conforming space.

Does bad credit affect investment loan interest rates more than owner-occupied? Yes. Investment loans already attract a rate premium over owner-occupied loans (typically 0.3–0.6% higher) as policy. When you add bad credit on top, the cumulative rate premium is higher than for owner-occupied borrowing. This makes the economics of non-conforming investment lending particularly challenging — and the benefit of credit repair particularly significant.

Can I use equity in my home to get an investment loan with bad credit? If you have substantial equity in your owner-occupied home — and that home is already mortgaged — a lender might extend further borrowing against that equity for investment purposes, depending on the LVR across the combined portfolio. However, most mainstream lenders will still apply their credit policy rules (including default exclusions) to any new lending. Non-conforming lenders are more flexible but again at higher rates.

Will credit repair help me get a better rate on an investment loan? Significantly. The rate difference between a non-conforming investment loan and a mainstream investment loan is typically 3–5%. On a $500,000 investment loan over 25 years, every 1% of rate reduction saves approximately $80,000–$100,000 in interest. Improving your credit file through professional removal of unlawfully listed entries is typically the most impactful lever available before making an investment loan application.

How long does it take to get an investment loan approved in Australia? For straightforward mainstream applications: 2–4 weeks from application to unconditional approval. For non-conforming investment applications: 3–6 weeks, as they require more detailed assessment. Applications following credit repair can often proceed to approval within 2–4 weeks of the credit removal being confirmed.

Make Your Investment Numbers Stack — Before You Commit

A free ACS assessment tells you within 24 hours whether any entries blocking mainstream investment lending can be removed — and what the investment economics look like after removal vs. accepting a non-conforming rate.

Australian Credit Solutions is ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild. No Win No Fee. 98% success rate on accepted cases.

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Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. General information only — not legal or financial advice. External resources: Equifax Australia | ASIC MoneySmart | AFCA

Related reading: Bad Credit Home Loans → | Non-Conforming Loans → | Default Removal Services →