As I was growing up we were taught “waste not, want not” and if you wanted something then you worked hard, saved up and then bought it with cash. The only ‘good’ loan was a mortgage to give you long term peace of mind over accommodation. The quarter acre dream was well and truly being lived.
Nowadays that attitude seems to have been replaced with one of “spend now, pay later” and owning your own home is becoming a dream for landlords only. It also seems quite a contradiction that the credit control legislation introduced last year has made getting a mortgage from the bank a whole lot harder but doesn’t seem to have affected easy credit and loans for other things.
Even after the credit contracts Acts were enacted with their emphasis on responsible lending including the requirement that a lender must consider a borrower’s personal circumstances and ability to repay without causing significant hardship before offering credit, people are still able to access and use credit to pay for essential household costs because their income has gone on non-essential costs.
Remember, now lenders have an obligation to ensure:
- responsible lending with complete disclosure of terms,
- stricter controls over loan applications and disclosure of hardship
- every lender has to be registered on the Financial Services register
The last point ensures that clients are able to complain and get solutions if they feel the lender has breached the legal requirements of the Act. Complaints can be made to the Securities Commission/Financial Markets Authority and/or the Disputes Resolution Service that the lender is registered with. All free of charge.
Pakanui Tuhura (Manager – Rotorua Budget Advisory Service Inc)