Getting approved for a mortgage after a loan default, missed repayments, or past credit issues can be difficult. But it’s not impossible! We understand that financial setbacks can happen, and many borrowers are able to rebuild their position over time.
In some cases, borrowers may also have experienced more serious events such as bankruptcy, which can affect lending options differently. If your situation specifically involves rebuilding after bankruptcy discharge rather than active defaults, you can also explore our article on mortgage after bankruptcy in New Zealand. Platinum Mortgages specialises in helping people navigate these situations and find a path forward.
Read on to learn about your mortgage options after credit issues, including what happens after bankruptcy or a loan default in New Zealand.
When you apply for a mortgage, the lender will calculate the risk in lending you money by looking at your credit score and credit history.
Your credit score is between 0 to 1,000 and reflects your credit history. This includes whether you pay bills on time, have defaulted on a loan, or have been discharged from bankruptcy within the last five years. The higher your number, the better your credit score and, therefore, the lower your lending risk.
You can improve your credit score by consistently paying your bills and repayments on time and avoiding applying for credit.
You can apply for a mortgage as soon as you’re discharged from bankruptcy and any time after defaulting on a loan. The challenge is in getting the application approved.
It’s unlikely that you would get a mortgage with a bank while you have a low credit score. Fortunately, some alternative lenders loan to those with past credit issues. To understand how specialist lenders work and when they may approve applications that bank decline, see our guide to Non Bank Lending in New Zealand. They will charge higher interest rates to offset the higher risk of the loan. There may also be additional costs, such as broker and lender fees. You would also need at least a 20% deposit; if you can build a bigger deposit, even better! A higher deposit will make the loan less risky for the lender.
To improve your chances of getting a loan, consider whether someone would be willing to be a guarantor. A guarantor is someone who agrees to guarantee your mortgage, committing to being responsible for repaying the mortgage if you can’t. Having a guarantor can increase your chances of getting a mortgage, as it decreases the risk for the lender.
While some lenders require two or more years to have passed after a discharge from bankruptcy, there are exceptions. While some lenders require time to pass after serious credit events, others may consider applications earlier, depending on the overall situation and supporting factors. The challenge is finding the right lender, which is why using a specialised mortgage broker is so important. To explore your options further and see how you can improve your chances of approval, read our article that focuses specifically on getting a mortgage after being discharged from bankruptcy.
As a company specialising in non bank mortgages, Platinum Mortgages has access to several lenders who do higher-risk loans. We’ll manage the process, provide guidance on how to improve your chances of getting approval. We will ensure that you understand the costs and risks. We’ll also help you plan to eventually refinance the mortgage back to a main bank. This is normally done, once your credit score has improved. When you can refinance to a main bank, we will manage the process for you.
Whether it is worth the additional cost of getting a mortgage now or waiting for your credit score and credit history to improve is entirely down to you and your circumstances. We can help you understand your options and put a plan in place that best suits you. Get in touch today to get advice specific to you, and see how we can help you get back on track.
Angela is an accredited Financial Adviser, licensed under FSP742251 and has been in the Financial Industry since 2006. Our 5-star Google reviews reflect the excellent customer experience we promise — making your home loan journey positive, stress-free, and rewarding. At Platinum Mortgages, our clients are the reason we exist — so you can be confident every step is guided by genuine care and expertise.
