guarantor loan and bad credit history

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BJS
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Joined: Thu Oct 08, 2009 2:19 pm

guarantor loan and bad credit history

Post by BJS »

Hi,

I am considering applying for a guarantor loan with my partner, with the assistance of bother parents, however I have a default refistered on my credit file from an electricity account, which was settled approximately 3 years ago.

I still have 2 years to go before the credit default is removed from my file. Is this likely to cause a problem in applying for a loan in the interim?

thanks

BJS

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: guarantor loan and bad credit history

Post by Otto Dargan »

Hi Bruce,

Yes this would likely be an issue. Most lenders will not accept any adverse credit history with guarantor home loans.

Unfortunately there are rarely any exceptions to this policy. If you have a VERY good reason for the default (divorce, serious illness etc) and evidence to back this up OR if the default is less than $500 and was paid more than 6 months ago then we may be able to get you a guarantor loan.

The other option is to do the 80% / 20% option where we arrange a small loan on the guarantors property and they either lend or give this to you as a deposit. Depending on how bad the default is we could get you an 80% loan on your property, thus avoiding the problem.

If you have anything to help make your situation stronger such as a perfect history paying rent, strong employment or some minimal savings to contribute then this would also be helpful.

Can you let me know the amount of the default and if you are ok with sharing the reason for the default then that information would also be helpful. Alternatively you can call us to discuss in detail.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

BJS
Posts: 2
Joined: Thu Oct 08, 2009 2:19 pm

Re: guarantor loan and bad credit history

Post by BJS »

Hi Otto,

Thanks for the prompt response.

The default was for an amount of $269 Australian Dollars. I default account was settled soon after I became aware of the situation.

As mentioned previously the default occurred as a result of a share house situation. Whilst sharing a house together with other tenants, some of the household accounts were listed in my name. After sharing this property for a period of approximately 12 months, I decided to move out of the shared house and into my own unit. As some tenants were going to continue living in the property, it was agreed verbally between all parties that I would move out, and the tenants staying the shared house would alter account name holder to be there own.

Somewhat I naively agreed to this arrangement, trusting my fellow housemates to alter the account details, but of course this did not occur. I became aware that an outstanding electricity bill had not been paid some months later, after being contacted by revenue collectors chasing the outstanding amount. I promptly settled the account however, the utility company had already placed this default with Veda Advantage.

I have been renting for approximately 11 years up to date, since the age of 18 and have had no issue with paying rent in a timely fashion. I also have a letter from the utility company, stating that the outstanding account has been settled in full and subsequently closed. I am currently employed and have be so for approximately 6.5 years, with this company for 2.5 years.

If I could get together the deposit I would, but regularly paying rent and saving for a deposit is a difficult task as you are aware. I have about $2000 in savings. If it weren’t for my credit default, I feel as though my partner and I could apply for a guarantor home loan

Do you feel there may be options for a guarantor home loan, or may be more beneficial to pursue an 80/20 option?

Thanks BJS

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: guarantor loan and bad credit history

Post by Otto Dargan »

Hi Bruce.

If we could get a letter from your managing agent confirming your rent is being paid on time and that you are an excellent tenant then I expect this would be ok for a guarantor loan because the default is old, it is small and there is a good reason for it. If you could provide some kind of evidence that your previous property was a share house such as a copy of the lease or a letter from the managing agent then this would be helpful. I know this is asking for a lot of info, however please be aware that lenders hear plenty of excuses for defaults and we have to show that you are not in this boat.

Utility defaults are considered in a good light compared to other defaults as the utility companies are well known for defaulting first, asking questions later (or not at all).

Just a few more quick questions:

* Is your guarantor a pensioner, self funded retiree or are they currently working?
* Do they have a loan on their property already? If so for how much approx and with which lender?
* Roughly how much is the guarantors property worth?
* How long has your partner been in their job for?
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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