Yes, they did it!
I was approached by a family in Greymouth who were sick of renting and wanted to own their own home. They had seen our website saying we could help people that had bad credit, and so in January approached me to see what I could do to help.
I explained that we would need to see everything and that started with a credit check, bank statements and of course an application which showed their statement of position.
We then reviewed things and reported back to them.
The First Assessment
When I looked at this in January there were a few issues that were identified, including the bad credit and the poor account conduct.
I had them get a free credit report from Centrix and on the credit check we had a low credit score of 321 and a default for him, and hers was worse. Because he was the only person earning we decided to process the application in just his name.
The credit report also showed he was late with his personal loan payments most months too, and the bank statements showed poor account conduct too with unarranged overdrafts and reversed payments.
There were too many negatives and so we were not going to be able to get a home loan approved at this stage, but rather than say “NO” we got them to sort out a budget, set some goals for them and said we would review in 3-months.
We recommend budget planner as it helps people to set and keep to a budget, but also has a dashboard to help with debt management and a savings dashboard so you can track your savings too.
It’s a very cost effective tool to get your finances in order.
The Home Loan Application
There were a few conversations and questions over the next few months and I knew that they were working hard to make sure their debts were being paid on time, and also to demonstrate that they could live within that budget and still save extra.
They were doing really well and when we got the updated credit check and bank statements things looked much better. The score had not improved much (it takes a bit longer) but their account conduct looked a lot better.
With the low credit score, defaults and the poor account conduct it was still not going to be an application for the banks – but they had a good deposit (mostly in KiwiSaver) and it was looking better so I was happy to present this to some non-bank lenders.
The Home Loan Was Approved
They were hoping for an approval, but I didn’t think they were too confident.
Of course they knew it was not a going to be easy and probably had heard of people that they expected were in a better position than they were and who had been declined. Their application was not going to be approved by a few of the non-banks lenders too, but we knew that we just needed one good approval and that would allow then to buy their own home.
We did get that approval too.
The approval was provided by a non-bank lender and it is more expensive than a home loan with a bank, but it means they are now in their own home.
They were able to buy a home in Greymouth for $278,000 and with their deposit they needed a home loan for $190,000. There were fees and the interest rate may seem high at 10.60% but the weekly repayments are $404 which is not too much more than the rent they were paying of $350 per week.
The aim now is to keep the account conduct squeaky clean and within 2-years we can get them refinanced to a cheaper option which should mean that the repayments are then less than what they would have been paying for rent.
There is always hope…
If you are in a similar situation don’t give up hope – contact me and we can review and discuss what you need to do to get a home loan.
