First home buyers come across all sorts of unexpected hurdles that stop them from getting on the housing ladder. It could be a poor credit record, thanks to a debt they'd forgotten about. It could also be an old insurance claim or claims coming back to haunt you. If you can't get house insurance, a bank won't lend to you.
Black marks on potential home buyers' credit records are one of the biggest hurdles, after not having a deposit.
Unfortunately, says Canstar general manager Jose George, Kiwis often have their head in the sand when it comes to credit scores. A Canstar survey of 2733 people found 60 per cent of Kiwis didn't know their credit scores.
Anyone who has had a utilities account, a credit card, HP or other types of borrowing will have a credit record. And, sometimes, old debts can come back to bite.
The three credit bureaux Equifax, illion (formerly Dun & Bradstreet) and Centrix each hold records on most adult Kiwi residents. They know what credit we've taken out in the past and how good we are at paying our bills.
Missed payments also show up on individual's credit files. Banks are less likely to lend to those they believe, from their payment histories, are less honest about or able to pay their bills. It's not a good look for someone who wants a mortgage.
The credit bureaus are starting to use what's called "positive reporting", which means they don't just assess late or non-payments as they did in the past. They now look at a person's overall payment behaviour. By paying bills on time those with poor credit records can start to resurrect their credit scores quickly and may be able to get a mortgage in the future.
Other ways, says George, of resurrecting a credit score include not maxing out credit cards, applying for one loan at a time, avoiding too many balance transfers and keeping good credit card accounts open. The good repayment history will help.
Anyone looking for a mortgage should check their credit file, which is free. An old written-off debt that they'd forgotten about may well be dragging the credit score down. It may be worth paying that debt off and asking the creditor to remove the report from the file, which can be done. There are also processes for challenging incorrect information held on a credit file.
One of the hurdles some home buyers face is the inability to get insurance on the house. Lenders won't lend on a mortgage if the home buyer can't get insurance, effectively locking such buyers out of home ownership.
Karen Stevens, Insurance & Financial Services Ombudsman, says the decision by insurers not to insure someone can be made for a number of reasons, including: past convictions, claims history, pre-existing damage to the house, recent natural disasters affecting the region, or having insurance cancelled or not renewed for other reasons.
Anyone caught committing fraud, which some Kiwis call "white lies", will have their name added to the insurance industry's Insurance Claims Register (ICR). Insurance companies often employ former detectives as investigators to look into anomalies in claims.
The Insurance Council of New Zealand (ICNZ) would not say how many names are added to the ICR every year. But names remain on the database in perpetuity.
In one case heard by the Ombudsman a wife complained her name had been added to the ICR following a fraud by her husband. Home buyers can't just insure the property in their partner's name. If found out, a claim would be declined.
Being listed makes it difficult or even impossible to get insurance because insurers don't like to offer cover to dishonest people.
Tim Grafton, chief executive of the ICNZ, says there are multiple ways people commit insurance fraud, including purposeful non-disclosure, double dipping (claiming twice for the same item), exaggerating a claim (adding things that weren't lost or damaged), and claiming for a lost item but not informing their insurer if the item is found.
"It is highly unlikely an insurer would take on a customer who has engaged in hard fraud, such as a deliberate and pre-meditated attempt to defraud an insurer," says Grafton.
The Ombudsman can't consider cases where people are unable to obtain house insurance, because it falls outside of the remit. "We can't consider the complaint because it's a commercial decision made by the insurer not to provide cover," says Stevens.
A home buyer caught committing opportunistic "soft fraud", such as making fraudulent additions to legitimate claims, could ask an insurer to be reconsidered, but has no guarantee of getting insurance again.
Stevens recommends that home buyers facing this type of issue contact a broker or another insurer to try to get cover, particularly if they require insurance for a mortgage. Brokers can sometimes argue their clients' cases.
Should they be lucky, it's likely that their premium would be increased significantly to cover the risk of insuring a proven fraudster.