What is a non-conforming home loan?
A non-conforming home loan is simply a term used for home loans that don’t typically conform to the standard loan criteria of the major banks. It is the opposite of what’s called a ‘prime’ home loan. If you’ve ever been declined for a home loan because you're self-employed and don't have the latest financial records or have a poor credit history, your Mortgage Broker may have referred to your home loan application as 'non-conforming’ or ‘specialist’.
If you’ve been identified as ‘non-conforming’ and rejected for a loan, you may feel getting a home loan might be out of reach, but there are options. Specialist lenders understand that life happens, and they can provide an alternative to borrowers.
Specialist lenders commonly assist borrowers with the following circumstances achieve their home loan goals:
Self-employed - unable to show proof of income as you've recently started a business
Poor credit history - previously declared bankrupt or a history of credit defaults
Have an ATO debt you need to pay out
Have a solid income, but not much of a deposit
Have a deposit but it’s an inheritance or a gift
Have non-standard income - work part-time or are a contractor, or have irregular income as a business owner
Have multiple debts to consolidate such as personal loans, credit cards or business debt
You’re nearing retirement and the major lenders don’t have an appetite to assist
Whilst many lenders don’t offer low doc loans, there are lenders that can help with alternative documentation (Alt Doc) loans. As the name suggests, the paperwork you need to provide isn’t less than a standard loan, it’s just different. It’s an alternative, more flexible way for lenders to verify income, rather than the usual 2 year’s tax returns and PAYG statements.
If you're having trouble because of your credit history, type of employment, or because your income type doesn't tick the right boxes, speak to your trusted Mortgage Broker today!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.