How Lo Doc and Non-Conforming Home Loans Work
What Is A Non-Conforming Home Loan?
In essence, it's a mortgage created for people with bad credit, or for people who may have trouble proving (through payslips and other documentation) that they have adequate income to service the home loan.
If you have a bad credit history you’ll generally find it difficult to get a mortgage through the traditional lenders such as the big four banks. But don’t give up hope. The non-conforming home loan was created for people in your situation
Bad credit history
One of the factors a lender considers in assessing your mortgage application is your credit history. If you have a poor track record in meeting your credit card or other loan repayments, you will generally be considered at increased risk of defaulting. This could mean you’ll pay a higher interest rate or they might reject your mortgage application altogether.
Non-conforming home loans – a bad credit option
Just because you have a bad credit history doesn’t mean that you will default. Many financial institutions have recognised this and so they have made available the non-conforming home loan. This has enabled people with a bad credit history and even recent bankrupts to take out a mortgage.
Higher risk means a higher rate
Since you are considered a higher risk, the Lender will typically charge you a higher interest rate for a non-conforming home loan. The greater the risk, the higher the interest rate. While you’d obviously prefer to pay a lower interest rate, a non-conforming mortgage at least lets you get back in the game.
Improving your credit rating
With a non conforming home loan, many lenders might start you off with a higher interest rate, but if you meet your repayments for an agreed period, they’ll reduce that rate.
A non-conforming home loan can be a good way for someone with a bad credit history to improve their credit rating. To learn more about non-conforming home loans, contact us today.
HOW WE SUPPORT CLIENTS
At Aspiire Mortgage Brokers, we have supported business and clients who are looking to finance property, investments, homes, vehicles and businesses, through:
- Arranging investment home loans and investment loans
- Arranging non-conforming property loans
- Ensuring investment debt is structured effectively
- Assisting in Accounting and Taxation needs with referrals to preferred accountants
- Arrangement and recommendation of SMSF lending
- Helping clients take an active approach to their finances
- Ensuring Debts and Mortgages are well managed and with good providers
At Aspiire Mortgage Brokers, we get more holistic results for our clients. Learn more about how we could help...