Getting a home loan when you have a bad credit report is not going to be as easy as it would be if your credit report was clear, but it does not mean that you cannot get a home loan either.
What A Bad Credit Report Looks Like
To many banks a bad credit report is one that may just have the slightest blemish or a looks okay but has a low credit score.
While other banks and non-bank lenders might consider a couple of small credit issues okay.
Typically any large defaults on what they call a bad credit report will cause issues with banks when applying for finance.
There are many reasons that a credit report looks “bad” and those issues are not always your own fault.
Why The Bank Says “NO” To Bad Credit
The banks like everything on a finance application to be perfect and simple, and unfortunately the banks often say “NO” without making any effort to understand what makes your application not fir the box – not to be perfect in every respect.
Banks can say “NO” for a number of reasons, but having a default or judgement showing on your credit report is one of the most common reasons for them to decline your loan application.
Some of the better mortgage brokers can often help you get a fair hearing with the banks. If the credit impairment is isolated, small, paid and the reason it occurred can be explained with an appropriate letter then the banks may be convinced to accept the application.
If the banks will not be persuaded, then the mortgage brokers should have alternative finance solutions to offer you.
The brokers at Mortgage Managers most certainly do.
We have a range of non-bank lenders that will provide adverse or bad credit home loans and the interest rates are often not much more than what a bank is offering, especially if it’s just a matter of poor account conduct.
Who Offers Bad Credit Home Loans?
Most banks do not offer finance to people that have a bad credit report as they deem that the risk is too high, but a few will consider this.
SBS Bank have a policy whereby a credit check must show no unpaid legal actions, judgments, collections, defaults, repossessions or write-offs of more than $500 and no paid legal actions, judgments, collections, defaults, repossessions or write-offs of more than $1,000 within the last 3-years.
The Co-Operative Bank have a Fresh Start option where you pay a higher interest rate for the deemed higher risk.
There are also non-bank lenders that specialise in this area offering loans to people whom the banks might deem have bad credit.
Resimac Home Loans are probably the best of these non-bank or specialist lenders and recognise that things happen throughout life and a few credit impairments do not make you a bad credit risk.
In fact Resimac Home Loans have designed their Specialist finance options that are designed for people that fall outside of normal bank criteria for a home loan. This means people that have been to the bank should not give up just because they have a bad credit report, and instead should contact a mortgage broker.
Talk To Your Mortgage Manager
The staff at the various banks are very limited with what they can offer as they have little or no choice, and in most cases the individual that you speak to will need to refer your finance application to the credit department for the final approval.
This is quite normal, and just like a doctor will refer you to a specialist the banks should refer you to a specialist mortgage broker – but they typically don’t!
The Mortgage Supply Company has a great team that understands that things can go wrong and often deal with people that have credit reports that are not quite perfect. Stuart Wills is the principal broker at the Mortgage Mangers office and is one of the best Auckland mortgage brokers for these non-standard loans.
Some of the loans that they get approved have surprised the customers due to the bad credit report and the big “NO” that their own banks have said.
