700K home loan with small default

Hi Guys,

Based on the information below can you check if we have a good chance of getting approved finance for such a big loan with a small default.

I gave got small utility paid default of $250 end of 2014 (Just over 4 years) relocated interstate at the time and never got the last bill! tried to get it removed to no avail!

We found a block of land we liked that was good value for money in a nice estate and put a deposit on it as they were going like crazy and we didn't want to miss out (land price $400K). We are looking at building a house maximum 300K.

My Salary : 72K 1.3 years in full time employment
Wife Salary : 92K 3.9 Years in full time employment
Savings : 60K (Inclusive of land deposit)
Credit limit combines : 3K
No other debts
Both no credit inquiries in the last 12 months
My Credit Score : 600 (With default)
Wife Credit Score : 750
 
Hi Guys,

Based on the information below can you check if we have a good chance of getting approved finance for such a big loan with a small default.

Husband got small utility paid default of $250 end of 2014 (Just over 4 years) relocated interstate at the time and never got the last bill! tried to get it removed to no avail!

We found a block of land we liked that was good value for money in a nice estate and put a deposit on it as they were going like crazy and we didn't wat to miss out (land price $400K). We are looking at building a house maximum 300K.

Husband Salary : 72K 1.3 years in full time employment
Wife Salary : 92K 3.9 Years in full time employment
Savings : 60K (Inclusive of land deposit)
Credit limit combines : 3K
No other debts
Both no credit inquiries in the last 12 months

Heya,

I haven't checked serviceability, but that shouldn't be a problem.

You should be fine - i'd personally stick to a lender with:
a) Does not credit score only (stay away from big4) - not saying it cant be done, just may be a hassle.
b) DUA. Can sign off on the mortgage insurance themselves.
c) Allows high LVR loans. With a 60k deposit and a 700k purchase, you may end up in 95 territory.

Cheers,
Redom
 
There's a few lenders that will ignore paid defaults under $500 but being high LVR territory may make it a bit tricky, but not impossible with a few if the niche lenders.
 
The paid default in itself isn't a huge problem - done plenty of these for clients without issues, the deals just require a little forward planning.

Redom: Where is this magic pudding non big-4, DUA to 95% non credit scoring lender?! Imagine the deals they'd have pushed through them. :D
 
You should give Kinnon (above) a call. She's based out of Cairns, which is a lovely sunny city, but sadly it's also got one of the highest rate of people with defaults (very tourist dependant and the high Aussie dollar hurts the tourism industry).

The comment about $500 or less is spot on. Higher amounts can be accommodated my quite a few lenders, but this is where a larger deposit can really help. High LVR means high risk to lenders. Throw in a default and they can get very nervous about the application.
 
Talked briefly to a broker who is pushing towards CBA as the best option as they can underwrite LMI and also that CBA would take the FHOG as deposit? if the fhog part is correct this would bring the LVR to 89-90 territoty right?

Serviceability is good as the wife could pay for the loan herself with plenty to spare. Combined we are saving 5K a month while paying $1.5K rent ( plus other small expenses on top) 1 Kid if that's of any help!

Heya,

I haven't checked serviceability, but that shouldn't be a problem.

You should be fine - i'd personally stick to a lender with:
a) Does not credit score only (stay away from big4) - not saying it cant be done, just may be a hassle.
b) DUA. Can sign off on the mortgage insurance themselves.
c) Allows high LVR loans. With a 60k deposit and a 700k purchase, you may end up in 95 territory.

Cheers,
Redom
 
Redom: Where is this magic pudding non big-4, DUA to 95% non credit scoring lender?! Imagine the deals they'd have pushed through them. :D

No magic pudding that i know of Corey...except one private bank that I don't have access to. Just a first cull of what to look for. AMP/Macq/few others should go to 90 under their DUA (although I suspect Macq may raise this up given default).

Majors may work too (CBA), but if the auto credit scoring comes out bad, it may need to be overturned which can be add time/uncertainty to the eqn.

If your going at a sub 90% lend, this won't be too tricky.

Cheers,
Redom
 
So will CBA take the FHOG as deposit amount?
As we really want this block of land (more important than the house, if we were to be rejected, touch wood it doesn't happen, could we then apply for the land only to secure it? I reckon this would then push us more in the 85% lend as no FHOG on land only?

No magic pudding that i know of Corey...except one private bank that I don't have access to. Just a first cull of what to look for. AMP/Macq/few others should go to 90 under their DUA (although I suspect Macq may raise this up given default).

Majors may work too (CBA), but if the auto credit scoring comes out bad, it may need to be overturned which can be add time/uncertainty to the eqn.

If your going at a sub 90% lend, this won't be too tricky.

Cheers,
Redom
 
Just checked and the default will be gone of the credit file mid may!

The title for the land is end of may beginning of June and we then have 21 days to settle which means that we don't need the money until the credit check is gone we mostly need a formal approval from the bank to provide to the land agent in 40 days so we can secure the land until it titles. Don't know if that make sense
 
Lenders will take the FHOG and any other grants as part of the deposit.

They still have a 'genuine savings' policy that you need to meet. This means you need to save at least 5% of the purchase price yourself outside of everything else. The FHOG isn't genuine savings.

My basic rule of thumb to make finance easy would be to have at least 12% of the purchase price available and to meet the genuine savings policy. This should cover everything, and you'll get a better deal. There are lenders that will give you a bit more, but not much (and they're going to be more expensive lenders).
 
AMP at less than 90% is usually ok.

Just go with a decent broker and you should be fine.

Kinnon's on the ball with default stuff - you should be in good hands calling her for assistance.

Cheers

Jamie
 
CBA DO NOT take the FHOG as deposit Im afriad. You will have to front the FHOG funds until the slab is poured and you get the FHOG from the SRO.

Just a reminder also to have the full build contract valued by the lender and full approval prior to the finance clause on the land expiring. Otherwise you face a lot more risks, the least of which is losing your land deposit.
 
CBA should be alright <90% possible scoring issues >90%

Paid default for utility shouldn't be an issue as you have an explantion, if you have proof of the move this would help.

Looks like getting some confusing info here from the brokers.

By the sounds you're having split contract, buying the land first and then building. so FHOG can't be used for the DEPOSIT on the LAND, . FHOG CAN be used for the funds required to build, but payment only received once slab has been poured.

Can you please clarify

- which state the land is being purchased
- deposit already paid for land
- does the builder require deposit if so how much
 
1 : WA
2 : Deposit already paid (Still in cooling off period)
3 : Builder requires 3 grand deposit

I would like to build on this block of land but wouldn't want to be rejected in case of the default. If split contract would give me a better chance of securing this block then that could be the better option as for now I only require a formal approval for the land in the next 40 days. The application for the loan itself will only happen end of may-beginning of june when the default would have been removed.


CBA should be alright <90% possible scoring issues >90%

Paid default for utility shouldn't be an issue as you have an explantion, if you have proof of the move this would help.

Looks like getting some confusing info here from the brokers.

By the sounds you're having split contract, buying the land first and then building. so FHOG can't be used for the DEPOSIT on the LAND, . FHOG CAN be used for the funds required to build, but payment only received once slab has been poured.

Can you please clarify

- which state the land is being purchased
- deposit already paid for land
- does the builder require deposit if so how much
 
2 : Deposit already paid (Still in cooling off period)
3 : Builder requires 3 grand deposit

How much deposit have you already paid?

You won't be able to use the FHOG for the deposit to the builder, but the FHOG amount will be able to come off the required funds for the construction.

If you clarify the deposit paid I can give you an example with some rough figures.
 
deposit paid for land is $5000

Builder wants $3000 which we haven't paid anything yet

Currently in savings : 60K (excluding land deposit)

How much deposit have you already paid?

You won't be able to use the FHOG for the deposit to the builder, but the FHOG amount will be able to come off the required funds for the construction.

If you clarify the deposit paid I can give you an example with some rough figures.
 
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