If you have a tarnished credit history, are self-employed or don’t meet traditional lending criteria, then a non-conforming home loan maybe an option. This type of home loan is either offered by a non-conforming lender or a non-conforming mortgage broker who specialises in lending money to individuals who deviate from the usual. These specialist lenders and brokers exist so that you can get back on your feet and rebuild your credit history, develop a credit rating or take out a home loan when you’re older and more of a risk. Typically, these products suit individuals who are self-employed, no longer work full-time, retirees, credit impaired, contractors or seasonal workers as they are considered as a higher risk.
Let’s look at non-conforming home loans in greater detail.
How Do Non-Conforming Home Loans Work
Non-conforming home loans are the same as other home loans in many ways. They come in a variety of rate types, such as variable, fixed or split, and as with traditional home loans, you can select from a range of features, such as line of credit, redraw and offset.
The major difference between non-conforming home loans and traditional home loans are the fees associated with establishing and exiting the loan. These fees are usually much higher than a traditional home loan, as are the interest rates that are offered. For instance, if a traditional lender is offering a rate of 4.47 percent then a non-conforming lender may be 1 to 2 percent higher, possibly more. Basically, the interest rate offered depends on the severity of the risk.
In addition, non-conforming lenders may be less flexible when it comes to refinancing your home loan. Therefore, before taking out a home loan with a non-conforming lender, make sure you read the terms and conditions and that you are fully aware of any fees and charges, and how much these cost. Also consider all of your options and the longevity of the home loan before you take out a non-conforming home loan. Everything may look good short-term, but you also need to consider where you will be in 4 to 5 years.
Who Are Non-Conforming Lenders?
The non-conforming home loan industry in Australia is said to be growing at around 40 percent per annum and is a billion dollar industry that turns over in excess of $10 billion dollars a year. In Australia there are a number of non-conforming lenders who offer a range of home loan products, the leading lenders are Liberty, GE, Bluestone and Pepper.
Non-conforming mortgage brokers at eChoice can offer you home loan products from the following lenders:
• Victorian Mortgage Group
• Liberty Financial
Interested in knowing more about non-conforming lenders? If so, then contact eChoice TODAY.
Written by eChoice