Can I get a home loan with a part 9 debt agreement?

couple with part 9 debt agreement applying for a home loan

 Estimated read time: 4 Minutes

Life is full of unexpected events that can result in financial strain. This can make meeting credit obligations difficult. 

For some people, this may lead to entering a part 9 or 10 debt agreement to help get things back on track. If you’re in this situation, you could find getting a home loan difficult. Depending on your circumstances, specialist lenders such as Pepper Money may be able to assist. 

What is a debt agreement?

A debt agreement is a legal arrangement for you to begin repaying the money you owe. These are often drawn up as an alternative to bankruptcy and are based on what you can reasonably afford to pay back. Your creditors (the entities you owe money to) must also approve the debt agreement for it to go ahead.

There are two types of debt agreements: A part 9 (often written as part IX) or a part 10 (part X) which form part of the Bankruptcy Act 1966. Whether you are eligible for a Part 9 or Part 10 agreement depends on your situation.


What's the difference between part 9 and part 10 debt agreements?

Part 9

Part 9 agreements are for people who are unable to repay debt, and their assets and income are below a certain set amount. Part 9 agreements typically last between three to five years, and are slightly more flexible than part 10 agreements.

Part 10

Part 10 agreements are usually for people who cannot repay their debts at all. Due to this, they are less flexible and last longer than a part 9 agreement. To find out the specific differences between a part 9 or part 10 agreement, see the MoneySmart website


What to consider before entering a debt agreement

While debt agreements are often a preferable option to bankruptcy and could relieve financial pressure, they can still have serious implications on your ability to obtain future credit. If you’re planning on applying for  a home loan, it’s important to understand what this means for you. 

Before entering into a debt agreement, you should seek professional advice to understand your options. For a list of financial counsellors, visit  the MoneySmart website or seek free independent advice via the National Debt Helpline – professionals deal with this all the time and will help you weigh up the options. 

Does a debt agreement impact your credit score?

Yes - debt agreements will leave a mark on your credit file and be taken into consideration when a lender assesses you for credit. Typically, they’ll remain on your credit file for up to five years, but in some cases they could remain on your credit file for longer.

Your name will also be placed on the National Personal Insolvency Index (NPII). The NPII is a publicly available electronic record that registers personal insolvency proceedings in Australia. The NPII is a web service that allows anyone to conduct a search to see whether a debtor is currently, or has previously been, subject to provisions of the Bankruptcy Act 1966. Any record on the NPII will be present on your credit report, which is checked by credit agencies when they assess your credit applications. This could make it difficult for you to obtain credit in the future.

Getting a home loan with a Part 9 debt agreement

You can apply for a home loan and buy a house when you are under a debt agreement, but it may be difficult to get approval. Lenders consider a debt agreement as an ‘act of bankruptcy’ that shows you’ve had problems previously paying back loans, making you a higher risk applicant. Some non-bank lenders may consider your loan application, though it may result in a higher-than-average interest rate to compensate for the increased risk of your loan.

If your debt agreement is active, it may count as an outgoing expense, which would give you less income to pay the new loan back. If your debt agreement has finished, this will be viewed positively by the lender, but some lenders may still deny your application.

It’s important not to rush into applying for a mortgage and make too many applications for credit. All applications are recorded on your credit file as hard inquiries, which could inhibit your ability to borrow in the future due to a lower credit score, as it could be seen as a red flag by a lender.

How we may be able help

In some cases, we may be able to assist you in finalising a debt agreement or structuring debt consolidation into your home loan. However, if you're looking to purchase a property, you will need to be officially discharged from your debt agreement to be eligible for a home loan with Pepper Money. Learn more about looking for a mortgage after bankruptcy

We understand real life happens. That’s why we have home loan options for people in your situation. As a non-bank lender, we consider multiple factors when assessing your loan application, not just your credit history.

When we talk to you, we’ll ask things like:

  • Why did you get into a debt agreement?
  • How new is the agreement?
  • What was the life event that may have caused this?
  • Is the life event still ongoing?
  • Are you looking to settle or pay out your agreement soon?
  • Have you been meeting all the obligations of the agreement?


These questions help us to understand your full story and help to work out a way forward. Just remember, all applications are still subject to our loan suitability and assessment criteria.

We believe a bad credit history doesn’t mean you shouldn’t be able to get a home loan. Our flexible loan options are suited to people in these situations - so if you’re looking to get a home loan after a debt agreement or after bankruptcy, speak to one of our friendly Lending Specialists on  137 377 or submit an enquiry online.


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