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What is a non-conforming loan?

All the major banks have a standard set of rules they use to decide if a loan application is acceptable, or not. A ‘non-conforming’ home loan is simply a term used for home loans designed for people that don’t fit those rules.

Loans like these can also be called ‘specialist’ or ‘alternative’ loans (alt doc). Non-conforming may not be a common term, but you might be surprised how many Australians have been declined for a home loan because they fall into this category, and why. For example, people who are:

  • Self-employed
  • Have recently started a business or a new job
  • Don’t have a perfect credit history
  • Been previously bankrupt
  • Have an ATO debt to pay-out
  • Have a solid income, but not much of a deposit
  • Have a deposit but it’s an inheritance or a gift
  • Work means they regularly change jobs, it looks like instability but it’s just the nature of the industry
  • Need to consolidate debts such as personal loans, credit cards or business debt
  • A new Australian resident, and therefore the previous credit history can’t be established.

That’s a lot of Aussies. The good news is that in today’s world there are lots of options. Well-established non-bank lenders have designed home loan products specifically to help all these people. They take a much more flexible and holistic approach to traditional lenders and can provide a range of good alternatives. 

If you’d like more information talk to us today about how we may be able to put you in touch with a lender that can help if the major banks have said ‘no’ to your loan application.

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