Hi,
I have an unpaid credit card debt of $10,000 that is listed on my credit file. This will be on my file for another 3 years. I now have a stable job and can save $2,000 a month. What is the best way to move forward in terms of getting finance and starting to invest?
happy to provide further details but wanted to keep things simple to start with.
Thanks,
cmur7
There are different types of defaults. Telco defaults are viewed more favorably than financial institution defaults. Defaults under $1,000 are viewed completely differently to defaults over this amount.
Your credit card debt of $10,000 falls into both categories that are viewed less than favorably.
Questions:
1. Why did the default occur? Was it your fault or someone else's fault?
2. How long did it take you to pay it?
3. What is the LVR on the loan?
4. Are you applying just in your name or with another applicant?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
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Thanks for your response, here are the answers to your questions.
1. The default is my fault. I went overseas for my daughters birth and forgot to pay my credit card bills that kept piling on. (I did close all other credit commitments that I had around that time)
2. It is still outstanding. Do I pay this off as soon as I can or can I get a low doc load that takes this into consideration. (I understand that these loans can cost an additional +2% interest rate)
3. I am looking for a 90% LVR
4. I will be applying in my name only.
Thanks,
cmur7
Ok in that case we are definitely talking about a specialist lender. You will not be able to go via mainstream lenders.
The interest rates are quite higher (close to the 9.50%-10% mark) and the application or risk fee is around 2%.
You have an option but you will need to pay.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
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Thanks for that,
cmur7
Can you give me a few examples of specialist lenders?
Thanks,
cmur7
90% LVR, unpaid $10k credit card default – do you want it financed under a hybrid trust too
I'm just joking – but this is a tough deal.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
People do make mistakes and learn through bad experiences. I am here to learn.
What strategies can I use to get finance? As in lower LVR to say 70% or 80%?
Will going in as a joint applicant with somebody with good credit help?
Thanks,
cmur7
I know that i'm new and i'm not as experienced as Shahin and Jamie but if i was in your shoes currently, I'd spend the next 5 months paying the $2000 p/m onto the credit card and closing it down, potentially ending up with greater borrowing power and more savings.
I was in the a similar boat 12 months ago but i had $55,000 of consumer debt (40,000 car debt, 10,000 motorbike debt, 5,000 credit card) i consolidated the lot 12 months ago and am now sitting on 32,000 in debt, my repayments were lowered and can now afford to save $16,000 per year toward investing.
Just my 2 cents, but hope you can get some finance soon..
I agree with scottyboy – that's a reasonable approach to take. Best to get rid of your current unpaid debt before embarking on taking out more.
With $2k spare per month, you'll knock it on the head quickly.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
There are many – the top 3 are Pepper Home Loans, Resimac and Homeloans Ltd (in that order). Pepper does has quite conservative servicing. These are very complex applications so you need to ensure that you structure it correctly.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
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Definitely an hard deal to place especially at 90% LVR especially with an $10,000 "unpaid" Consumer debt also it sounds like you only just started your current job recently ie less than 12 month; which doesn't help..
Best to pay out the debt first before investing.
P.s once it's paid out, make sure you ring the CC company and get them to list it as "paid" Also it be a good idea to "work" something out with the CC company, it's common for them to reduce your CC rate by half for 6 month, allowing them to recover most if not their full cost back.
Regards
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
As others have mentioned, it will be very difficult to place a deal at 90% with an unpaid debt. At a much lower LVR it starts becoming possible, but even despite this, the interest rate is high.
Best option is to repay the debt. This makes it appear that you are willing to pay off your debts and makes the lender much more prone to lending you money.
In terms of your credit file, you need to ascertain whether it is listed as a default or clearout. Defaults are listed for 5 years while clearouts are listed for 7 years so it might be on there for longer than you think.
The other thing to note is whoever the credit card is with, you won't be able to borrow from that lender again, even when the debt is cleared off your credit file. They will have that on their files forever.
Cheers
Tom
THat is a big mistake. Very hard to forget about a $10k debt.
Do you have a judgment against you? You can be bankrupted any moment so if someone knocks on your door asking for you by name pretend you are someone else and close the door.
Because you can be bankrupted any moment I think it will be very unlikely you will find finance because no lender wants to lend you money only for you to go in bankruptcy
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
As i assuming you are not contesting the fact that it was wrongly registered ?
Had one removed for a forum client this week although the account was sent to a previous address.
Can't think of any good excuse off the top of my head but i guess there are options.
Also assume you haven't considered not being a party to the loan or Title and having it in the other parties name solely.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
If the outstanding amount is settled is there any way the listing on the credit file can be removed?
It comes down to the reason I guess. If it wasn't your fault then you could try and contest it. I doubt it's possible though, it's quite a large default.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Even if the default is paid in full not only will it not fly at 90% LVR – it will not fly at 80% either. As I said the default is too large and even worse its a financial institution default which is much worse (in the eyes of the lender) than a telco default. It would have to be an incredibly strong application to fly at 80%.
The only option would be a specialist lender.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
A settled default makes no difference whatsoever to a major lender especially at that size.
Hate to say you are going to end up paying over the odds for the loan for the next couple of years.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I would never refer someone to a specialist default lender but this is an example of a time/scenario where you have to and unfortunately pay the premium price.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
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