Non Conforming Home Loans
Property ownership is many things: A long-term investment to boost your finances, a potential aid in securing a quality retirement, an assurance of physical safety and security and an intangible milestone in the course of any individual’s life.
Despite these many benefits, there are many Australians who are shut out from home ownership due to the restrictions of lending criteria. They are perceived as too much of a financial risk by a lender and can’t secure financing to buy their dream property.
This is why non-conforming home loans exist – to extend the promise of property ownership to those who would otherwise go without.
At Future Financial, we know that home buyers come in a range of diverse backgrounds and do not necessarily fit neatly into the image of the ‘typical’ lender. We offer a range of non-conforming home loans that take into account the different histories and circumstances of our customers.
Why are some borrowers unable to secure a home loan?
There are a number of reasons why lenders would be more hesitant to lend to certain buyers. Ultimately, it all boils down to whether or not they’re a financial risk – the lender wants assurance that a borrower won’t default on their loan, and some individuals give less of an assurance than others.
A typical non-conforming borrower is one with a bad credit history. This can come about from various factors:
- unexpected illness or disability hindering your ability to work
- too much debt
- late or missed repayments
- lending money to somebody else
Some of these can be the product of genuine financial mismanagement – for example, bad credit management can leave you with an oversaturation of debt and steadily rising debt levels.
However, some are also the result of human fallibility and factors beyond your control – you can’t help it if you became too sick to work, for example, and it doesn’t seem fair to let a few late payments years before leave a permanent black mark that prevents you from financially moving on. This can become a vicious cycle that only serves to further set back your financial standing.
Non-conforming borrowers come in a variety of other forms, too. Some buyers simply lack a sufficiently long employment history to demonstrate a history of earnings – if you were a stay at home parent for a long time, for example, or are fresh out of university and have only just started full-time work.
By contrast, some borrowers who can demonstrate their financial history may not have one that is encouraging to the lender. Perhaps you have little to no savings or assets that you can point to, or you have a number of applications for credit – or even worse, refusals of credit – to your name.
One of the more common factors is employment. Self-employed people can find it difficult to point to a steady income that proves their ability to repay a loan, and have difficulty gathering the strict documentation they need to satisfy a lender.
Non-conforming borrowers should still have a shot at the Australian dream
All of these different financial circumstances have a few things in common:
- through no fault of the borrower, they are in a position where they cannot accurately prove their income or financial stability.
- the borrower’s past financial history doesn’t necessarily reflect the reality of their current financial status
It’s fundamentally a question of fairness, one that non-conforming home loans attempt to solve. After all, should you be punished forever for a mistake that is long in the past – or, even worse, something that’s entirely out of your control?
Non-conforming home loans give borrowers a chance at a fresh start. Everyone deserves a second chance, especially when it involves the long-cherished Australian dream of property ownership.
The cases of Jessica and Troy
Jessica is single and just about through her mid-20s. Until just over a year ago, she was working in Newcastle writing for a fashion magazine. While she was one of the office’s rising stars, in hard economic times the company closed down and she found herself out of a job. While she looked for a new position, she lived off her savings and did what little part-time work she could to pay the bills.
The job hunt went slower than she expected, however. Not only that, her new financial situation was insufficient to cover the rising cost of living, and she found herself falling behind on her bills, drawing regularly on her credit card to pay for food and other essentials. Her missed bill payments were recorded as defaults on her credit report, while her credit card debt only went further into the red.
Since then, Jessica has regained full-time employment and made great strides in tackling her credit card debt, as well as catching up on her defaulted bill payments, all of which were under $1000. But because of her credit history and her past of unreliable employment, most lenders are wary of giving her a home loan.
Troy is facing a similar situation. Troy has worked in the mining industry in Queensland for many years as a contract worker. The nature of his career is such that he periodically finds himself in long periods without any work, even though his actual pay cheque tends to be quite generous when he is employed.
This is rarely a problem for Troy, as he is always able to save up enough until the next job comes along. Three years ago, however, he defaulted on a hire purchase loan when interest had made his debt spiral out of his control. Now, no lenders seem willing to work with him. He can’t even get hold of the right documents to secure his mortgage.
If that weren’t enough, neither Troy nor Jessica have any substantial savings or assets they can point to. What is their solution?
Future Financial has a range of non-conforming home loans on offer
At Future Financial, borrowers can find a number of different non-conforming home loans that would suit both the circumstances of Jessica and Troy, as well as a range of other individuals.
This lending is available for purchasing a home, refinancing an existing loan and even potentially giving cash out. Some of our non-conforming home loans also offer rewards for making repayments on time, such as seeing your rate reduced upon the first and second anniversary of your loan.
Our non-conforming home loans can consider borrowers with all types of credit impairment, and certain types of defaults and judgements are disregarded all together.
Despite their missteps along the way, under these conditions both Jessica and Troy could get financing for their home loan, with the option of transitioning to a standard type of loan down the line. In Troy’s case, lacking the right documentation won’t necessarily be a problem either, as he can take on our non-conforming low doc plus home loan.
If you’re ready to make a new start and leave the past where it belongs, contact Future Financial today.
Your Home Your Mortgage:
A Home Buyers Guide
Your Mortgage Your Options:
A Home Owners Guide To Refinancing
From the moment you turn the key in the lock and take those first few steps through your new front door, the feeling of owning your own home is second to none.
Your Home Your Mortgage aims to arm home buyers and investors with essential know-how and proven techniques to ensure you avoid the common pitfalls of financing a property.
There’s no question the current mortgage environment is one of the most competitive in our nation’s history.
Refinancing provides Australians with a platform to get a better deal on their current mortgage, many of which may have been locked in some years ago at interest rates well above what’s on offer in today’s competitive market.