Credit repair will have you feeling better in more ways than one. I mean, what would you, could you do with $18,000+ extra per year?
We get it, some people are desperate to get that home loan that they’ve been itching to get into for years. Imagine, you’ve found the home of your dreams, you excitedly go to a mortgage broker to get them to write your loan for you. They run a credit check and bam, there’s a default listing or judgment on your credit file. You wrack your brain wondering how you missed or forgot about this and then it all comes back to you; that time 3 years ago you moved house and forgot to update your address or that time that you experienced financial hardship and literally couldn’t do anything to pay that creditor. It was a long time ago and you’re in a completely different financial position now.
Your dream home feels like it’s going begging and then your broker tells you there are options; you can get a home loan with a second tier lender that’s not your bank. There is a moment of elation, but of course, you’d be smart to crunch the numbers before you jump in, as your broker tells you that you can expect to pay higher interest rates and fees if you decide to go down that route.
Let’s break it down to exactly what you could be looking at in 2 options.
Firstly, if you have a squeaky clean credit file, you’re looking at a $500,000 mortgage, you have a 10-15% deposit saved and your borrowing capacity is good. As an example, you go online through a lender that’s offering 3.5% comparative; your monthly repayments will be around $2,200. Application fees are between $0 and $600. Or maybe you want to go with a big bank, who charges 4-5% comparative. Monthly repayments in this scenario are around $2,500 and again application fees are usually $0.
Secondly, if you’re credit file is impaired, with a default or a judgment, or you fall outside of the banks typical lending criteria. Again, with a $500,000 mortgage and 10-15% deposit. Your option is to go through a second tier lender, the interest rate increases to over 8.5% and application fees are $900+. In this example, you’ll be paying $3,600+ per month. If you have a deposit of 45% you will get an interest rate of around 6%. However, I don’t know many people with $240,000 lying around.
The above examples demonstrate that you can expect up to $1,400 in savings every month for at least 12 months + at least $1,000 in application fees. That’s a total saving of almost $18,000 in one year.
So yes, there are options when you have defaults and judgments, but it will cost you big time. And I can think of some better ways for you to spend $18,000, compared to putting it down the drain with a second tier lender. If you’ve got 4-6 weeks, don’t settle. Have us fix your credit file and get you access to the best interest rates around.
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