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Debt

Discussion in 'Introductions' started by boss, 10th Feb, 2013.

  1. boss

    boss Member

    Joined:
    10th Feb, 2013
    Posts:
    11
    Location:
    brisbane , qld
    Hey everyone,
    i stumbled across this site while looking for info to get my finances in order and signed up after reading the first forum !
    Im a father of 4 with a beautiful wife and im also self employed for the past 8 years in which we almost went bankrupt due to alot of errors on our behalf but have fought our way out of it for the past 4 years and finally getting on top of it . The problem we have is our credit rating having run behind on accounts and repayments which have all been payed to date bar credit cards which we havnt been able to pay for a long period that will be fixed up in the coming months.
    Our aim is to try and get into a house for ourselves firstly for we had to sell our house to fix up bad debt and eventually want to get into investing to make money low risk which doesnt involve employee's . We have been renting for 4 years and have not missed a payment , we run no accounts pay up front for everything and have weekly payments over the past 4 years consistantly to prove our cash flow. We also have our business running at 70% profit on a turnover of $200,000 p/a which i think is quite good for a one man operation.
    After all that my question is would i be able to borrow money for a home loan or any advice on which direction i should go to get to my first goal ?
    any advice would be much appreciated , thanks
     
  2. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    Depends on how your credit report actually looks. I suggest you get the free copy of your report from Veda Advantage.

    Also you will need a deposit and money for costs. Around 10% of the purchase price.
     
  3. boss

    boss Member

    Joined:
    10th Feb, 2013
    Posts:
    11
    Location:
    brisbane , qld
    thanks terryw,
    we do have a plan in which we will have a 10% deposit by the years end and we have a $20,000 o/d and a $20,000 business loan which both will be paid in full over the next 4 months but the problem is credit cards which we used as cash flow to try and stay afloat during hard times as everything else was exhausted. we had 8 cards which went to debt collection and were put on hold to the value of $40,000 and we do have glitches against our name for each one of them.
    just wondering how that will go against us when we approach banks for a loan and what sort of time frame we would be looking at ? also would they take in to account thay you have a good consistant income , payed back all of your debt and are running the business to its potentiaL?
    At the time we could have gone bankrupt and were advised to do so which would have been easier but i knew i could fix it and i think going bankrupt when not necessary is wrong and i was right because 4 years down the track and we are almost there bar having our home back!
    The credit card debt and loans will be paid outright in coming months so we will have no debt and a good income. The things that worry me are we read that you have to wait 7 years from when the glitch against your name was placed is there anyway around this?
    Sorry if you have gone to sleep reading this just trying to give an idea of where we are at , thanks
     
  4. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    Yes. that might be a problem.
    Best to get a copy of your report and see what is on it.

    It is only 5 years too - bankruptcy is recorded on file for 7 years everything else 5.
     
  5. boss

    boss Member

    Joined:
    10th Feb, 2013
    Posts:
    11
    Location:
    brisbane , qld
    will do , thanks for your time mate apreciate it
     
  6. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    Boss,
    The decision to not go to bankruptcy is a ethical one and you should be applauded for it, especially paying back your debt.
    There are lenders that will operate outside a strict policy box and take into account where you are now and where you have come from. Paying off the credit cards and cancelling most of them will show intent and purpose and character.

    That said, you will still be regarded as a risk and while you could get a loan, it will probably need to be a full doc loan supported by 2 years tax returns at an 80% loan to value ratio (LVR). Saving for that deposit and paying off credit card debt is a juggling act, which do you need to do first?

    Without knowing the specifics, I would look to pay off credit cards before the overdraft or business loan. get a good mortgage broker to then do some work for you on borrowing capacity and what lenders will do before you decide funds are better off saved as a deposit or to pay these two business debts down.

    There are lenders that will lend in nearly all cases as long as you can show serviceability but with past defaults and low deposit and if it is a low doc loan then the interest rates you will pay will be high. Again work with a good mortgage broker to see what the alternatives are and make the decision which way to proceed.

    Good luck with it. Let me know if you need anything more.
    Greg