Bad Credit and Getting Finance to Buy a Home. Jon Purdey, Broker, Edge Mortgages Auckland

Every time you apply for any sort of Credit — from a credit card to a car loan up to a mortgage for a house, the lender will look at your Credit History. Every time they do they leave a record of what, and how much, you are applying for.

If you fail to pay a supplier, such as the phone/electricity company, someone who has provided a service you have not paid for, or a lender they can lodge an entry on your Credit Report which tells anyone doing a credit check after them that there was an issue. Even when paid the item remains on your history for 5 years.

For a lot of people, the first time they find out they have an issue on their Credit Report is when they go to apply for a mortgage. Given the current lending policies, unless there is a very good explanation, the Bank will decline the loan at this stage. Up until recently you would not be able to borrow until the item had gone from your Credit Report — or at least been paid with a lengthy wait – until the Bank would look at the application again.

The good news is that there are lenders who have now come back into the market who will lend even if you have a number of credit issues. The price for these loans is higher – as these lenders perceive they are taking a bigger risk due to your credit history — but there is the ability to get up to 80% of a purchase price or refinance.

The changes mean that you can now get back into the property market instead of waiting for up to 5 years or you can save that property you own and would love to hang on to.

Your borrowing-life no longer has to be put on hold because of “bad credit”.