Discover how we navigated the complexities of poor credit home loans to help the client complete their renovations and set them on a path toward better financial health. Navigating the world of home loans can often seem straightforward, especially when you have a strong income and substantial equity in your property. However, even the most seemingly simple loan requests can become complex when factors like poor credit come into play. In this article, we explore a real-life scenario where a client seeking a small additional loan for home improvements faced unexpected challenges due to a low credit score.
Poor Credit Home Loans Case Study
A client with a home loan was seeking to borrow a small extra small amount to complete some home improvements that they had already begun. The client had a strong income and there was lots of equity in the house. So it seemed like a straight forward deal.
Aside from getting the extra money, the client just wanted a simple home loan, with principal and interest repayments, no fees and the lowest possible interest rate.
But it was not that simple…while the client had made the repayments on their home loan in a timely manner, their credit score turned out to be very low due to a record of late payments on a number of credit cards. There were Instances of being up to 4 months late.
So mainstream lenders would not consider lending to the client. And now it was a case of finding a solution rather than simply a cheap interest rate.
This was a big shock for the client as they had not appreciated the impact of their credit card conduct. However, faced with not being able to get the extra money and living with building works that were half done (no bathroom), the client quickly adjusted their home loan expectations.
We were able to refinance the existing loan and get the extra funding required with a non-prime lender. The rate was around 1% higher than the best rates around but it allowed the client to finish their renovations.
If the client manages their credit cards properly over the next 18-24 months, we would expect that their credit record would improve sufficiently to allow them to refinance back to a mainstream lender at the best available rates.
So this is a great example of how seemingly simple scenarios often have a lot more complexity than appears on the surface and only once we have the complete picture can we effectively advise and guide our clients towards the right solution for them.
This case highlights the importance of understanding the complexities that can arise even in seemingly simple loan scenarios. Poor credit home loans require careful consideration and tailored solutions to meet clients’ needs without compromising their financial future. By working closely with the client, we were able to secure the necessary funding for their home renovations and set them on a path to improve their credit score. With proper management, they will be well-positioned to refinance at better rates in the future, proving that with the right guidance, even challenging situations can lead to successful outcomes.
