Your 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
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Source: http://www.articlealley.com/article_69108_19.html
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