The most expensive type of Finance when Purchasing a New Home is known as a
'Bad Credit Loan' or 'Blacklisted Loan'

If you are looking for a loan to buy a home but find that due to your low credit record that the only finance you get is a Bad Credit Loan then before going ahead with this very expensive option perhaps you should consider the following

Last updated: 11 July 2009

Dear Blacklisted

 If at first your home loan is declined, your bond originator can always attempt to apply on your behalf for a bad credit loan or blacklisted finance. Firstly what you need to be asking yourself is; "What are bad credit loans and how does it work, and why are some companies falling over themselves to provide you with this solution?"

The answer is clear...

A home loan for an induvidual with bad credit means that your credit profile contains some blacklistings or defaults. Your inability in the past to repay debts reflects at the credit bureau's which in turn is used by the bank or other financial service providers to score you.

Once you apply for a home loan then your mortgage originator will send your bond application off to the bank. One of the first things the bank will do is perform a credit check which is based on a scoring system that automatically pre-approves or declines you. The bank then notifies your mortgage originator whom then may choose to offer to apply for a bad credit loan (they won't use the words "bad credit loan" they may just say something like "special finance").


"Do you believe that your bad credit loan
is helpful or harmful to your financial future?"

At this stage, you are just happy to get a home loan right! However the hidden costs are far too high and the long term effect on your financial situation can be crippling.

Mortgage originators make their money on commissions paid based on the bond value that they register. It makes common sense to offer an alternative even be it a much more expensive solution to you their client.

Simply put blacklisted finance or a bad credit loan is normal bond finance wrapped up into a "special" higher interest loan! This means that you will pay a higher premium of interest on the bonded loan due to your lower credit scoring.

Instead of paying at worst prime you now have an added one or two percent on top of this. All in all you will most likely pay tens if not hundreds of thousands more than you should due to your bad credit loan! As a simple example assuming that the prime lending rate is 15.5% and due to your low credit score you get a rate of 1.5% higher than prime at 17%.

Let's assess the costs;
Monthly loan repayment @ 15.5% R11, 507
Monthly loan repayment @ 17% R12, 467
Monthly Difference Lost! R960    
Interest repayment over 20 years @ 15.5% R1, 911 916
Interest repayment over 20 years @ 17% R2, 142 273
Difference Lost! R230 357

Clearly loans for blacklisted or a bad credit loan is definately one of the most expensive types of home loan finance you can get.

Financing your home loan under normal conditions is even expensive, especially if you do not get a great interest rate of say -2% under prime lending rate. Even though you may qualify for a secured loan for bad credit is it really worth throwing your hard earned cash away?


There Are Smarter Alternatives If You Have Been Blacklisted To Purchase A Property!

Register now and receive a FREE case study to learn how a home was purchase using a lease purchase

Learn How To:
=> Buy Without Using Conventional Finance
=> No Complicated Bank Procedures
=> You Can Buy Even If You Are Blacklisted
=> Your Own Payment Terms










More articles on Bad Credit Home Loans


Site Navigation

Is A Blacklist Preventing Home Ownership For You?
A few forgotten defaults and you won't be able to qualify for home ownership. Find out what alternatives you have and also how to repair your credit record.

(Article) Current Properties To Let & Buy
Uploaded are just a few of our properties available (some taken already). Please note that our houses are taken very quickly as there is a small release every month and if you wish to be informed and in-line to receive detailed property listing information then you MUST register first.

(Article) Are You Sure That You Want A Bad Credit Home Loan to Purchase A House?
If your credit score is 'bad' do you know what the real costs of obtaining Blacklisted Home Loan Finance over the long term could be?

Rent or Buy A House? (Your Burning Questions Answered)
Yes renting can be far cheaper BUT if you buy a house you can build up equity in your home over time but which is the best for you now?

Why Give Away Thousands In Rental When You Can Own - Rent To Buy? 
If there was someone willing to give you the opportunity to buy instead of renting would you consider this option? At least inform yourself of the possible options as a renter just in case.

 

Is A Judgement Preventing Home Ownership For You?
Just one unrelated Judgement and you will not get a bond easily for many years. Don't loose heart there may be another way for you.

How Can You Afford To Own A House With Such High Costs 
Have you calculated the costs of owning your very own home and how much you will need in order to purchase in todays strained economic climate.

Does the National Credit Act Mean That You Will Have To Buy a Less Conveneint Home? 
Previously you qualified for a decent home and now you may have to settle for a smaller house in a less desirable area.

7 Proven Steps to Repair Your Credit Profile And Pay Off Debt Faster! 
Are your debts strangling you? You need a simple and effective plan to manage your debts and still live decently. Find out how this debt repayment technique has assisted someone to repay hundreds of thousands of rands in the shortest possible time.