Too Many Enquiries - Lender and LMI Advice

[krystal27]

My husband and I want to purchase our first home under $300k, we have:

5% deposit
1 x $24k debt ($470 a month consolidation loan which we just got last week) - this was used to consolidate six debts.
1 x MasterCard $1000 limit nothing owing
1 x Visa $6000 limit $5500 owing

We pay $2100 a month in rent, put $2k towards savings, no dependants, combined annual earnings around $150k so we would have absolutely no problems servicing the loan.

Issue is we got married in April, costs of course spiralled and I applied for a few credit cards to cover the shortfall. After that I applied for a few consolidation loans which got rejected (due to too many enquiries) before finally bankwest came to the party and approved us after conducting a six week forensic evaluation of every aspect of our finances.

Because of these enquiries my credit score is awful.

We're scared to apply for a mortgage because we think the banks and LMI will definitely decline us because of the enquiries.

Anyone have any advice on the best lender to apply through?

 

[pinkboy]

Your credit rating is toast.

Best bet would be to sit on the sidelines, pay out all your debt and then think about a mortgage in a year or 2 after that.

I would think very few conventional lenders would even touch this.

Bikies @ 3% maybe.


pinkboy

 

[krystal27]

Bankwest have said we "approve comfortably" with an 8% deposit, which we'll have by March at this rate, but it's more the LMI I'm worried about. Only reason I'm looking into it now is because we found a great property.

 

[Peter_Tersteeg]

We've recently helped a client get two loans where he had 15 credit inquiries in the last 18 months. The initial application failed because we didn't know the full history, but it did give us the background to select a more appropriate lender.

Many of the inquiries were various pre-approvals which never proceeded, but some of the older credit hits were rejections.

Another recent case had some defaults and a high LVR. In this case we didn't get ideal rates but the extra cost wasn't so high that the deal still worked.

An over active credit file isn't a complete disaster, but the options are restricted. Depending on the circumstances the loan can still be reasonably competitive or it can be outright horrible, but don't expect a super cheap deal.


Unfortunately though, I doubt there is a reasonable immediate solution here. A 5% deposit makes it difficult to get finance with a good credit history.

The good news is that you appear to be back on track and are managing to save money. Keep doing this. You need a bigger deposit than 5% (have you considered you need to pay stamp duty as well). Saving more money will put you in a better position to get finance, and it will take some time which will mitigate some of the credit enquiry issues.

Under no circumstances should you take out any more personal debt. No personal loans, no credit cards, not even balance transfer cards. This is ultimately what's gotten you into trouble. If you're able to save money, there's no reason you should need these. If you're not saving money, you can't afford them.

 

[sanj]

so you had 6 personal loans + 2 credit cards??

the issue you have here is that if you get declined by bankwests insurer then it's yet another enquiry against your name. have you been going through a broker? your best bet would probably be going through a bank that self insures but a broker would know better than i will.

i think you also need to look at your expenses and tighten things up a bit, only saving 2k a month when youre earning 12k before tax, in a fair bit of debt and only paying 2k in rent is a bit of a poor effort.

it's good you have found SS, this place is an excellent source of info but its now time for you to grow up a bit financially.

good luck with the purchase!

 

[krystal27]

Thanks Peter, this serves me right for going to open for inspections yesterday!. We're thinking about moving into a smaller rental so we can push our savings up to $3k a month, so thinking that is probably our best option in the short term.

 

[krystal27]

so you had 6 personal loans + 2 credit cards??

i think you also need to look at your expenses and tighten things up a bit, only saving 2k a month when youre earning 12k before tax, in a fair bit of debt and only paying 2k in rent is a bit of a poor effort.

good luck with the purchase!

Yes, we are tightening up, only reason we haven't saved more is I had to finish paying off the wedding then had some serious medical issues that left me with $24k in bills I had to pay off quickly which sucked a lot of our cash (I chose to go private and pay more rather than go on public waiting list), and we did have $35k in debt, but I paid it down in the months before bankwest approved the consolidation, so we are in a much better position now than we were six months ago but still have a way to go

 

[J_aco]

Hi OP,

1. Understand you got married in Apr hence the big bills. But have to agree with Sanj though about how your combined income is $150k pa but only saving $2k/month - should be able to do better that that?

2. I'd think paying off the "bad debts" as quick as poss would be the priority?

3. Don't know whether you and your husband have thought through your goals: are you planning to buy a house/PPOR and not worry for at least 2-3 years? Or do you want to set a goal of building a portfolio of properties?

If it's the latter you would like to structure yourself correctly from start; and most of us here would recommend that you talk to a savvy broker. And since you're from Melb, you can consider emailing Pete and get a better idea.

Hope all goes well!

 

[krystal27]

Definitely interested in a portfolio, I'm hopeless with money (clearly) so need all the help I can get! Thanks to everyone for responding this seems like a great forum!!!

 

[sanj]

Yes, we are tightening up, only reason we haven't saved more is I had to finish paying off the wedding then had some serious medical issues that left me with $24k in bills I had to pay off quickly which sucked a lot of our cash (I chose to go private and pay more rather than go on public waiting list), and we did have $35k in debt, but I paid it down in the months before bankwest approved the consolidation, so we are in a much better position now than we were six months ago but still have a way to go

fair enough, sounds like a pretty intense year!

 

[J_aco]

How's your husband with money?

I know it sounds cliche but... you need a budget! To help yourself to know where the money is going... considering your annual combined income is decent, there's no reason why you can't save at least 20-30% of your salary?

And if you're interested in a portfolio, if you are willing to be serious about this, you need to know your income and expenses, how much money you'll realistically have at the end of a month etc.

Put your mind to it!
And you've found a great place to ask and learn too!

 

[krystal27]

Ha, good question! He is very careful with his cash, but I think because I'm the breadwinner (he earns less than half of what I earn) he has always let me maintain control - and look where it has gotten us!

 

[datto]

Too many credit enquiries.:..sounds like credit providerd are suffering from paranoia lol

 

[krystal27]

sounds like it!

 

[Moyston]

first thing is do is ring up and cancel your mastercard with nothing on it..eliminate the temptation!..

 

[TMNT]

2k per month,
500 per week
Isn't too bad for a newly married couple to save in my opinion

Btw. At one stage I had 15 enquires in 8 months due to loans,

My loans were approved,
Does the nature of the enquiries matter?

 

[krystal27]

2k per month,
500 per week
Isn't too bad for a newly married couple to save in my opinion

Btw. At one stage I had 15 enquires in 8 months due to loans,

My loans were approved,
Does the nature of the enquiries matter?

Yes David I should cancel the MasterCard but my husband has hidden it, hahaha!

And thanks TMNT, I've never had a savings account before this year so for me to have over $16k in one account is a definite achievement, even though it does seem paltry in comparison to what we earn, we are definitely on the right track.

 

[antistar]

have over $16k in one account

Definitely pay off and close all cards immediately and put the rest on the personal loan. With your combined income you should be able to kill the personal loan off within 6 months too. By the time you save some more after that (another 6-12 months) your credit file will cool off a bit (assuming NO other enquiries in the mean time) and you may be ready to look at next steps from there.

Don't let the banks send you a monthly reminder of how nice your wedding and honeymoon was for too much longer.

 

[The Y-man]

Between this

My husband and I want to purchase our first home under $300k,

and this

We pay $2100 a month in rent,

aren't you going to have a major lifestyle difference????

Why not rent somewhere that's worth $300k (which means your rent will be more like $1200 per month), and put the savings toward wiping out the debts like people above have said....



The Y-man

 

[krystal27]

Between this




and this



aren't you going to have a major lifestyle difference????

Why not rent somewhere that's worth $300k (which means your rent will be more like $1200 per month), and put the savings toward wiping out the debts like people above have said....



The Y-man

Hahaha, depends which way you look at it - we currently live in an old inner city house where we pay for the location. We're looking to buy well out in the suburbs to be closer to family and friends, and only need a unit at this stage. So lifestyle change in terms of location, but quality of home, no.