Getting your mortgage was a huge win when it originally happened. But maybe things aren’t quite as rosy for you right now financially.

Will you still be able to refinance your home loan with bad credit?

Follow these tips to maximise your chances of success.

Bad Credit

Having bad credit means you have a low credit score. This is a reflection of negative listings on your credit report, such as missed payments, loan defaults, Debt Agreements or bankruptcies.

While you won’t have access to the lowest interest rates or best loan terms, it’s still possible to refinance your mortgage if you have a poor credit history.

Why You May Want to Refinance Your Home Loan

There are a number of reasons any of us may want to refinance our mortgage and having bad credit won’t necessarily stop you from achieving this.

Whether you want to secure a better rate, features, or to consolidate debt, refinancing may be the solution.

How to Refinance Your Home Loan with Bad Credit

Work to improve your credit score: First, get a copy of your credit report. Look for and report any errors, and then create a realistic budget to get your debts under control and repay your debts, on time every time.

Highlight your good qualities: Having bad credit means you are a high-risk borrower.

Try to shine the light on good qualities you have, for example a long-term job, or a savings account.

Avoid mortgage insurance: By borrowing less than 80 per cent of the value of the property, you won’t need to apply for mortgage insurance, which is another credit application hurdle.

It also shows the lender that you have at least 20 per cent in savings, and a lower risk borrower.

Work with your current lender: If you have a history of on-time payments and are current on your loan, they may be willing to work with you despite your bad credit.

Speak to a mortgage broker: A licensed mortgage broker has access to a number of lenders and will be able to help you with the application process.

They will also be able to advise you on the likelihood of your application being approved, before submitting the paperwork.

Talk to a specialist lender: Unlike the major banks and lenders, specialist lenders don’t assess your application on the number of defaults and the amounts of these defaults, but how long ago you made these mistakes.

They are more flexible and are more willing to offer loans to help individuals pay off existing debts.

Get a co-signer: Having a co-signer can help you qualify for a loan (or better interest rate) than you may be able to get on your own with bad credit.

They will be held financially responsible for your refinance if you miss payments, which means their credit is also at risk — which makes it a big commitment.

A cosigner does not get to use your loan, nor gain any ownership of your property.