SALLY TINDALL
RESEARCH DIRECTOR AT RATECITY
I
f youhavea poorcredithistory,securinga
homeloa nis u n li kelyto beea sy,butit ’snot
necessarilyoutofthequestion.Youmight
justhavetotaketheroadlesstravelled.
Manymainstreamlendersshyawayfrom
applicantswithbadcreditfora coupleof reasons.
First,it cantakeupmoretimeandresourcesto
assessa mortgageapplicationfromsomeonewith
a chequeredcredithistoryand,second,people
withbadcreditareseentobemorerisky– and
thisis a riska lotof bankscanaffordto dowithout.
Bycontrast,somenon-banklenders,suchas
PepperMoney,Liberty,WellHomeLoansand
Resimac, specifically cater for people who don’t
fit neatly inside the box. These lenders promote
the fact that they sit down and hear out someone’s
story before making a personalised assessment
on whether they can provide finance.
If you are in the market for a mortgage and
you are worried about your credit history, start
by checking your credit score and ordering a
free copy of your credit report. That way you
know what you’re dealing with from the outset.
Australia has three main credit agencies: Equifax,
Illion and Experian.
If there are any inaccuracies in your report,
call the credit provider and ask them to fix it.Unfortunately,if you’vegota genuineblackmark
onyourfile,youcan’trewritehistory,butyoucan
starttakingstepstoimproveyourcreditscore.
Atthispoint,it’sworthconsideringyouroptions.
Bad-credithomeloanscanhaveinterestratesthat
are2%,3%,sometimeseven4%higherthanlow-
rateloans.Thiscouldaddhundredsof dollarsto
yourmonthlyrepaymentsandpotentiallyhun-
dredsofthousandstothetotalcostofa 30-year
loan.Withthatin mind,if youcanputyourhome
loanapplicationonthebackburnerfora bit,
it mightbeworthit.
If you’veworkedouthowmuchextrayou’ll
have to pay for a bad-credit loan and you still want
to press ahead, try to save up a decent deposit,
then sit down and work out an iron-clad plan to
ensure you meet every single repayment – even
when life throws you a curveball (or two). After
a few years of paying off your loan on time, you
might find your credit score has improved to the
point that you can refinance to a lower-cost loan.
W h i le it ’s i mpor ta nt to do you r resea rch on t he
different loans available, try to do your homework
before you submit your application. If a number
of lenders each make a credit inquiry on your
file within a short space of time, it might reduce
your credit score.SALLY TINDALL CREDIT & DEBT
WHERE I WOULD
INVEST $10kDeciding where to invest
depends on opportunity and
timing. If there are some easy
renovations to do on an invest-
ment property while the tenants
are away, I would jump at the
chance. Replacing the floors or
updating the kitchen are likely
to increase both the rental and
capital value of a property.
If there’s no low-hanging
fruit there, two other options
would be:-^ Making a pre-tax contribu-
tion into super, because the tax
concessions are attractive (and
I really should have added more
to it 10 years ago); or
-^ Investing in shares but you
have to bear in mind I’m a set-
and-forget type of person in
this domain.
With two young kids I have
enough to worry about on any
given day, so I like to pick shares
that I don’t have to check in with
regularly.
Companies that are at the
forefront of medical research
and continuing to invest in R&D
appeal to me, such as Cochlear
and CSL, but again it all comes
down to timing because I don’t
like overpaying if I can avoid it.
Can I still get a home or
investment loan with a bad
credit history?
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EXPERT PICKS • WHERE TO INVEST $10k