Copyright 2006 Tracey AndersonYour credit rating will be one of the biggest factors that
will influence your ability to get a mortgage, and how much
interest, fees, and down payment you will be required to
provide. In Australia, the agency that collects and reports
on your credit information is Baycorp Advantage
(http://www.mycreditfile.com.au). Any negative credit
information, including defaults, bankruptcies, or
judgments, as well as information about how many inquiries
have been made against your file, is maintained by this
company.
By law, Baycorp Advantage must provide Australians with a
free copy of their credit history. It takes about a week to
ten days for you to receive your credit file in the mail.
If you need is sooner, Baycorp has an expedited service
that will get it to you in 24 to 48 hours, although there
is a fee for the expedited report. In New Zealand
(http://www.mycreditfile.co.nz), there is a fee involved to
obtain a copy of your file in any case.
Mortgage lenders tend to be a lot stricter than other
lenders. You may be able to get credit cards or a car loan
with spotty credit, but it is more difficult to get a
mortgage without a clean credit report. It's important to
note that even having too many inquiries counts against
you, so be frugal in how many times you allow potential
creditors to access your file.
Although there is negative information about you, positive
information is not included. Paying your bills on time will
keep negative reports off your credit report, but the fact
that you pay on a timely basis is not expressly noted due
to Australian and New Zealand privacy laws. Further,
negative data can be held for only five years, except for
bankruptcies, which are noted for seven years.
Your good credit report is a big part of getting a
mortgage, and it's a good idea to get a copy of your report
before you make any applications. This will give you a
chance to correct any inaccuracies that may exist. Also, it
gives you a chance to re-adjust your timing. If for
example, you have a negative mark that is four years and
eleven months old, you may wish to wait a month before
making any applications, since once that negative mark
turns five years old, it disappears.
If you do have some bad marks on your credit, it is still
possible to obtain a mortgage from a sub-prime lender, or a
lender that offers non-conforming loans. However, the
interest rate, fees and points are likely to be higher, and
you may be required to put down a larger than normal down
payment. When seeking out a non-conforming loan, it is
important to beware of predatory lenders. Deposit-taking
institutions are regulated by the Australian Prudential
Regulation Authority (http://www.apra.gov.au), but there
are other lenders who do not fall under the APRA's
jurisdiction. One of the main non-conforming lenders in
Australia is Liberty Financial (http://www.liberty.com.au).
If you do decide to apply for a non-conforming loan, try to
find one with reasonable pre-payment terms. You will want
to try to improve your credit rating after you get the high
interest, non-conforming loan, so that you can switch to a
conforming loan later on once your credit has improved. If
your non-conforming mortgage does not allow for
pre-payment, then you will be stuck with high interest for
years, even though your credit may improve over time.
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Tracey Anderson is a mortgage broker with 16 years
experience in the Australian mortgage industry. To speak to
a mortgage broker and get help with finding the right home
loan from a wide selection of lenders, visit
http://www.mortgagemall.com.au
