Can I get a mortgage with Bad Credit?

Maybe…

There are a few options out there if you have bad credit, ie you have a number of defaults or judgements on your personal credit file. We have certainly been able to get people mortgages they never though they could get.

First lets look at the different types of bad credit.

Defaults and judgements:

This is where you have failed to pay a debt or a bill and someone has lodged it with a debt collector and/or the credit reporting agencies.

How a lender will look at this depends on how many you have, how long ago they were, and did you pay them. Your deposit level will also make a difference. A 20% deposit gets you more leeway than a 10%.

So if you had 1 powerbill that went to baycorp (or Veda or the others), 4 years ago, from a flat you left and missed the correspondence, for a few hundred dollars and you paid it straight away, you are much less likely to have issues than if you have 1 a year for the past few years, some are over $1000 and they are not paid.

Whats really bad? If its to a bank. If its your credit card that defaulted or your personal loan to the bank, the banks are much less likely to look at you (and definitely not the one you have the default with).

Bankruptcy/No Asset Procedure:

This is the big one. If you are a bankrupt, you need to have been discharged for a number of years (3-5, lender depending) before they will look at you, and you will likely need a larger deposit. NAP is better, but still similar. 

What are the options?:

We always try the banks first, but if they wont help, we do have options out there, with non bank lenders. You may end up paying more, but once in the market, you can get a couple of years of a good payments history and then we move you back to a main bank, to save interest.

What Next?:

If you think you have bad credit, get a credit report, go to https://www.govt.nz/browse/consumer-rights-and-complaints/debt-and-credit-records/check-your-own-credit-report/ which has the details for the various providers.

If you have listings, make sure you write down the full story of how it happened. Banks don’t like surprises and need a good reason and they are pretty cynical about most peoples reasons.

Then try to make sure they are paid off, if you can.

If you think you are then ready to buy, give us a call and we can see if we can go to a main bank or have to look at the wider market. If you think your credit situation is a mess, get in touch and we can arrange a plan to clear all the debt over time, and get you into the best position to buy.