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Can You Buy A House with Bad Credit in NZ?

Everyone deserves the ability to own a home. Traditional home loans and standard home mortgages shouldn’t be only available to the wealthy or those with perfect financial histories. Just because people make poor mistakes, doesn’t mean that they can never be part of the homeownership club. Instead, all people should have access to home mortgages and house loans.

Bad credit home loans or bad debt home loans help those with poor or little credit history by providing them with a financial product that understands the difficult considerations come along with traditional bank financing. Traditional banks are required to follow strict guidelines on loaning money for mortgages. They need to make decisions based purely on credit worthiness. However, many people would be left with renting as the only option if this were the only way to get a mortgage.

Alternative lending products allow those with poor credit to obtain loans via other types of income proof and documentation to prove loan worthiness. This means that a mortgage broker will be able to personalize a loan package based on the information you can provide, even if a traditional bank would otherwise say no. When you are ready to make the positive leap for your financial future, you need to contact a New Zealand mortgage broker with your needs and circumstances. Below are the basics that you need to understand so you can make a fully informed decision about your bad debt home loan needs.

What is Bad Credit?

Bad credit is based on your history of repaying different types of bills and debts. When you buy a car on credit, you have a fixed monthly bill. The same goes for mortgages and education personal loans. If you under-pay or miss a payment, that will reflect poorly on your ability to maintain scheduled and fixed payments. Credit cards, utility bills, and medical bills can come and go. They can increase or decrease based on the events of that month. The ability to plan for costs and pay off in full each bill as they arrive is a monumental task for a lot of people. Underpaying these bills or only paying the minimum amount will negatively affect your credit.

Credit develops over time. If you are young, you may not have had enough time to pay off bills. In this case you don’t have enough of a credit history to be able to prove your ability to pay anything off. Either way, bad credit happens over time, not overnight. Further, good credit happens over time, and not overnight as well. Not everyone has the luxury of time. This is where bad credit home loan financing plans pay off for those in financial distress.

Can You Buy a House with Bad Credit?

With a traditional loan a bank mortgage officer lending manager would normally require detailed banking information, billsany debt repayment history, prior tax information, prior income verification, and anything else to fully establish your ability to pay. However, often the case with bad credit, these details don’t fully justify an individual’s ability to pay or worthiness to obtain the loan.

When your mortgage broker works with you on a bad credit home loan or a bad debt home loan, they will be able to use other types of information to bolster your application with either a non-banking financing business or a traditional banknon-bank lenders. This allows anyone with bad credit or significant debt to customize a home loan such that they can own a piece of New Zealand for themselves.

What kind of Loans are available to people with Bad Credit?

All types of traditional loans are available for those with bad credit or bad debt. Often mortgage brokers get the basic question: can you buy a house with bad credit in NZ? The answer always is yes. Though there are considerations to pass before anything is finalized, bad credit, poor past decisions, or increased debt should immediately stop you from reaching out to mortgage broker to find out what you can afford.

How Does My Application Affect My Terms?

Everything matters, but don’t let that stop you from getting a bad credit home loan. When you are going to apply for a home loan, make sure you understand that the more recent, the number of times, and amount of complication of any of your prior defaults will affect the interest rates you get. The more recent the default means that the interest rate will be higher. This is the same for a more complex default and more of them. If you have fewer of these issues your interest rate will be more competitive. Look back at your last two years. Use those two years as your benchmark for financial analysis.

However, don’t prejudge your situation. Any loan manager will consider the totality of your situation in order to place you in the right loan interest rate. A mortgage broker will be able to review your financial history with you and advise you on what your best strategy is. Every detail is important. Don’t evade any financial questions and make sure that you fully answer all of the questions. It could mean the difference between a good loan and a great loan. Reaching out to a mortgage broker is the best thing that you can do for your present circumstances and your future financial self.

Basic Mortgages
The basic mortgage is available to those that have few documents supporting better credit, improved debt, or consistent income. These types of loans are highly basic with standard terms and realistic payback time periods. The purpose of a loan isn’t to force people into bankruptcy. Rather, it is to get people into a home and allow them to securely pay the loan off over the course of the pay periods.

Full-Service Traditional Mortgages
If you are looking for something more akin to the standard home mortgage, then you can opt for a more complex financial instrument. This full-service mortgage isn’t complicated but allows for more flexibility to pay off the loan earlier and requires a higher level of income documentation.

Split Mortgages
Split mortgages are great if you want to take advantage of the swings of the interest rate markets. When you take out a loan you can specify a split in the amounts. A portion of the loan principal will have a fixed interest rate. The other, remaining, portion will have a variable or non-fixed interest rate. The variable rate that you pay depends on the interest rate market. As this changes over time you could benefit when the rates go down or pay a little more when they go back up. However, you will always have the reliability of part of your loan being fixed to the interest rate that you original purchased.

What Considerations Are Part of a Bad Debt Home Loan?

Think about the past few months of your life. What did you buy? What did you buy on credit? What did you buy with cash? What bills did you pay? Did you pay them in full or only a portion? Were there any bills that you didn’t pay? Where you paid anything? Where did it come from? A job? A gift? How often are you employed? Is it gig work or contract work? All of these and more will give your mortgage broker a complete picture of your financial situation. The more details and proof the better position you will be in when you start to negotiate terms.