20 May How Debt Review Affects Buying a Car or House

If you are under debt review or have recently completed it, one of the most common questions you will have is whether you can still buy a car or a house. The short answer is: you can buy a car or a house while you are still under debt review, but not if you need to obtain a loan for the purchase (as you’re not allowed to apply for credit while on debt review).

Understanding that path is what makes the difference between feeling stuck and feeling prepared.

Why You Cannot Take on New Credit During Debt Review

Debt review is a formal legal process governed by the National Credit Act. One of its core rules is that you may not take on any new credit while you are still in the process. This includes vehicle finance, home loans, personal loans, and retail accounts.

This restriction is not arbitrary. The entire purpose of debt review is to reduce your financial obligations to a level you can actually manage. Allowing new credit on top of an existing restructured repayment plan would defeat the point entirely and put you at greater risk. Your debt counsellor has a legal and ethical obligation to ensure this does not happen.

Your credit profile will also show a debt review flag at all credit bureaus, which means lenders can see your status immediately. Even if you were to apply, no registered credit provider operating within the law would approve the application.

What About a Car? Can You Keep the One You Have?

This is where many people feel anxious, and understandably so. If you already have a vehicle on finance when you enter debt review, the good news is that debt review is specifically designed to help protect your assets, including your car.

Your debt counsellor will restructure your vehicle finance instalments as part of your overall repayment plan, often at a lower monthly amount. As long as you keep up with your reduced payments, your vehicle is protected from repossession. This is one of the most valuable benefits of the process.

If you do not have a vehicle when you enter debt review and you need one, you will need to find alternatives for the duration of the process.

Options include public transport, lift clubs, or in some cases, purchasing a very affordable second-hand vehicle for cash if you have the means. Financing a new car is simply not possible until your debt review is complete.

Can You Buy a House While Under Debt Review?

Yes. You can buy a house while you are under debt review, but not if you need to obtain credit to buy the property, since you are not allowed to apply for credit while on debt review. A home loan is one of the largest credit agreements a person can enter into, and it is completely off the table while you are under debt review. This applies even if you find your dream home, even if you have a deposit saved, and even if a seller is willing to negotiate.

Banks and bond originators run credit checks as a standard part of every home loan application. A debt review flag is an automatic disqualification. The application will not proceed.

This can feel discouraging, especially if you were working towards homeownership before your financial situation changed. But it helps to see debt review for what it is: a temporary process with a defined end. Most consumers complete their repayment plan within three to five years, and from there, the road to homeownership opens up again.

Your Clearance Certificate

Everything changes when you receive your Form 19 Clearance Certificate. This document, issued by your debt counsellor once all included accounts are settled, officially ends your debt review. Your counsellor notifies the credit bureaus, and your debt review flag is removed, typically within five to seven business days.

From this point, you are legally free to apply for credit again. You are no longer restricted, and lenders can evaluate your application on its own merits.

That said, the flag being removed does not automatically mean you will be approved for a car or home loan immediately. Your credit score will need time to recover, and lenders will want to see a track record of responsible credit use after debt review before approving larger facilities.

How Long Before You Can Finance a Car After Debt Review?

Vehicle finance is generally more accessible than a home loan in the period after debt review. Some specialist vehicle finance providers and certain dealerships work with buyers who have a recently cleared debt review status, though the terms may be less favourable initially (higher interest rates or a larger deposit requirement).

As a rough guide:

• 6 to 12 months after clearance: Some lenders may approve vehicle finance, particularly if you have started rebuilding your credit profile and can offer a deposit of 20% or more.
• 12 to 24 months after clearance: Your chances improve significantly as your credit score recovers. Standard vehicle finance through mainstream banks becomes more realistic.

The key is to avoid applying at multiple lenders at once. Each application triggers a hard inquiry on your credit report, and too many in a short period can actually lower your score further and signal financial desperation to lenders.

How Long Before You Can Apply for a Home Loan?

A home loan requires more patience, but it is absolutely achievable. Banks want to see a minimum period of consistent, positive credit behaviour after debt review before approving a bond. Most financial advisors suggest waiting at least two to three years after receiving your clearance certificate before applying.

During that time, focus on:

• Building your credit score actively. Open a small credit facility (a retail account or secured credit card) and use it responsibly. Pay the full balance every month, never just the minimum.
• Saving a deposit. A deposit of 10 to 20% of the purchase price significantly strengthens any home loan application. It also reduces your monthly repayment and signals financial discipline to the bank.
• Keeping your debt-to-income ratio low. Do not take on new debt simply because you can. Lenders look at how much of your monthly income is already committed to debt repayments. The lower this number, the stronger your application.
• Maintaining a stable employment record. Consistent income over a period of at least two years is one of the most important factors in a home loan assessment.

You can use the True North Debt calculator to get a clearer sense of where your finances stand today, which is a useful starting point for planning your post-debt review goals.

One Common Mistake to Avoid

Many people who complete debt review feel an immediate sense of relief and freedom, which is entirely warranted. But that relief sometimes leads to rushing back into credit before they are truly ready.

Taking on vehicle finance or other credit too quickly after debt review, without giving your credit profile time to recover and without a solid budget in place, can lead you back into over-indebtedness faster than you might expect. The goal is not just to finish debt review. The goal is to never need it again.

If you are thinking of cancelling debt review early because you want to buy a car or house, please read that guide first. Exiting the process prematurely without a clearance certificate can leave you in a far worse position than staying the course.

The Bigger Picture

Debt review is not a life sentence. It is a structured, legal process that protects you while you get back on your feet, and it has a beginning, a middle, and an end. Buying a car or a house after debt review is not a pipe dream. It is a realistic goal for anyone who completes the process correctly, rebuilds their credit thoughtfully, and gives themselves the time to do it properly.

If you are not yet in debt review but are struggling to keep up with repayments, CONTACT US to discuss your options.