A Debt Agreement can be a great solution to your financial problems, giving you the breathing space you need to pay your creditors a comfortable amount, and providing a foreseeable end to your unsecured credit card and personal loan debt. It does, however, come with consequences, the main one being that it will mark your credit file. This can be a concern for those who, whilst probably not wanting another credit card any time soon, are thinking of the future and one day obtaining a home loan.

The default that you get from lodging a Debt Agreement lasts for five years, so if you are wondering if you will ever be able to get a mortgage, the answer is yes. After the five years is up it will be completely removed from your credit file, and the only remaining record will be on the National Personal Insolvency Index, which is rarely looked at by the banks as they would have to pay a fee every time.

For some people, though, the idea of a five year default is still very daunting. But when looked at realistically, the overall impact of the default is not only often minimal, but also a bit of a blessing in disguise. Because getting a mortgage is not just a matter of having a clean credit file – there is also the matter of having a healthy deposit. For many people struggling with credit card and personal loan payments, saving up a deposit for a home loan is simply impossible. By entering into a Debt Agreement you will be able to completely pay out your unsecured debts within a three to five year period, after which you can put that money aside into a savings account and be ready with a deposit when the default has been removed. And don’t forget, having a default on your file doesn’t necessarily mean that you cannot get credit. It could be that you will get the mortgage within the five years, but you may end up needing a bigger deposit or paying a different interest rate.

The pressure of dealing with overwhelming debt can make it hard to see past the next month, let alone the next five years. If you feel that you could benefit from a formal debt arrangement, but are worried about the future, call us for advice 1800 653 485. We can thoroughly assess your financial situation and help you determine whether that mark on your credit file might actually help you achieve your financial goals.