Getting A Home Loan After Part 9 Debt Agreement

A Part IX (9) Debt Agreement is a legally binding arrangement under the Bankruptcy Act 1966, designed to help individuals handle unmanageable debt without declaring full bankruptcy. While it offers financial relief, it also affects your credit history, which can make getting a home loan more challenging. However, securing a mortgage is still possible with the right approach after a Part IX debt agreement.

Can You Get A Home Loan While In A Part IX Debt Agreement?

No, you generally cannot take out a home loan while still in a Part IX Debt Agreement. However, there are lenders that may allow you to refinance your current mortgage to pay off the debt agreement.

Most lenders will consider you for a home loan only after you have been discharged from the agreement.

How Soon Can You Apply For A Home Loan After A Part IX Debt Agreement?

You don’t necessarily have to wait five years for the agreement to clear off your credit file to apply for a home loan. Your eligibility depends on how long it has been since your discharge:

• Immediately after discharge: Some specialist lenders may consider your application one day after discharge.
• 12 months after discharge: More lenders become available if you demonstrate a strong repayment history.
• Two years after discharge: More competitive loan options with lower interest rates may become available.

What Are Your Home Loan Options After a Part IX Debt Agreement?

Your options depend on how long it has been since you exited the agreement. Here’s what you need to know:

• Refinancing to Pay Off the Debt Agreement: Some specialist lenders can help refinance your current mortgage to pay out your Part IX agreement, if you’ve made consistent repayments.
• Specialist Lenders for Recent Discharges: If you’ve been discharged within the last 12 months, some non-conforming lenders may approve your application, though at higher interest rates.
• Mainstream Lenders After Two Years: If you’ve been discharged for two years or more and have a strong repayment history, major lenders may consider your application at standard interest rates.

Tips to Improve Your Home Loan Application After a Part IX Debt Agreement

• Show Employment Stability: Lenders prefer stable employment (12-plus months), consistent income (2-plus years for self-employed), and permanent positions over casual/contract work for better loan approval chances.
• Save A Larger Deposit: Aiming for at least 20% will improve your chances of approval and reduce the need for Lenders Mortgage Insurance (LMI).
• Demonstrate A Solid Repayment History: Show consistent payments on rent, existing loans, or bills.
• Reduce Existing Debt: Before applying, minimise personal loans, credit-card balances, and other financial commitments. Review your buy-now, pay-later services, like Afterpay and Zip Pay.
• Choose The Right Lender: Not all lenders assess Part IX applicants the same way. Working with a mortgage broker can help identify suitable options.
• Consider A Guarantor Loan: Your chances of approval may improve if a family member is willing to act as a guarantor.

If possible, wait until the five-year mark, when the Part IX Debt Agreement may be removed from your credit file. This improves your home loan eligibility and interest rates.