Can I get a home loan with a default?
Short answer
Yes. A default does not permanently exclude you. Some mainstream lenders accept small paid defaults — often telco or utility debts under about $1,000 — while specialist and non-bank lenders assess unpaid or larger defaults on a case-by-case basis, generally at a higher rate and a lower LVR, with a refinance back to prime later.
- Default retention
- 5 years on your credit file
- Often acceptable to prime lenders
- Paid, small (<~$1,000), non-financial
- Specialist LVR ceiling
- Commonly 80–85%
- Typical specialist margin
- Roughly +1% to +3% over prime
A default stays on your credit file for five years, but it does not sit there as a five-year ban. What matters far more is what kind of default it is, whether it is paid, how old it is, and how your accounts have been conducted since.
Not all defaults are read the same way
- Telco and utility defaults are treated far more leniently than financial defaults.
- Paid beats unpaid, decisively — paying the default before applying changes the conversation.
- Age matters: a default from four years ago with clean conduct since is a very different file to one from four months ago.
- Multiple defaults, or a default plus recent arrears, signal a pattern rather than an event — that is what moves a file to specialist lending.
Conduct is what specialist lenders actually assess
Non-bank and specialist lenders generally do not use a credit score as a pass/fail gate. They read the account conduct: are the mortgage or rent payments on time, are direct debits dishonouring, is the transaction account regularly overdrawn. Six months of clean conduct is often worth more than a 100-point improvement in a score.
The path back to a normal rate
Specialist lending should always be a bridge, not a destination. The standard plan is 12 to 24 months at a specialist rate with perfect conduct, letting the default age and equity build, then a refinance to a prime lender. Structure it that way from the start: avoid long fixed terms and heavy break costs that would trap you in the higher rate.
How XLOANS helps with this scenario
We check the policy before an application is lodged, not after. That means confirming with the lender's own guidelines that your situation fits — tenure, income treatment, credit file, deposit source — so the enquiry on your file is one that has a genuine chance of approval.
Our service costs you $0. We are paid an ongoing commission by the lender for as long as your loan stays with them, which is why reviewing your loan later matters to us as much as settling it now.
Book a free 15-minute chat
Pick a time that suits you and an XLOANS broker will call to talk through your home loan options — no cost, no obligation.
Keep reading
Frequently asked questions
This page is general information only and not financial advice. Lending criteria, rates and government schemes change — speak to an XLOANS broker for advice tailored to your situation. XLOANS is a Melbourne-based mortgage broking service.
Book a free 15-minute chat
Pick a time that suits you and an XLOANS broker will call to talk through your situation — no cost, no obligation.
Get a straight answer on your situation
A free 15-minute chat is usually enough to tell you which lenders fit your scenario — before anything touches your credit file.