The Non-Conforming Borrower
Dont Think You Have No Choice
THE NON-CONFORMING LOAN MARKET IN AUSTRALIA IS BIGGER THAN MOST PEOPLE REALISE, THERE IS A SIGNIFICANT INCREASE INASSISTANCE FOR PEOPLE THAT DON'T MEET THE GENERAL BANKS GUIDELINES.
NOT EVERYONE IS BLESSED WITH HAVING A SOUND FINANCIAL TRACK RECORD, PERFECT CREDIT BACKGROUND AND STABLE JOB HISTORY. BUT DESPITE WHAT MANY PEOPLE THINK, THERE ARE LENDERS OUT THERE WHO WILL LEND TO THE 'CREDIT IMPAIRED AT COMPETITIVE RATES WITHOUT HAVING TO PAY APPLICATION FEE'S OF 1% - 3% OF THE LOAN AMOUNT.
What makes you Non-Conforming? While there is no hard and fast rule on what constitutes a non-conforming borrower, the following broad categories cover five of the most common reasons why a 'prime' lender is likely to decline your application for a home loan.
BAD CREDIT
Being credit impaired is a polite way of saying there is a dirty black mark on your credit record.
Essentially, the credit impaired fall into two broad categories. Firstly, there are those people who have had a major life event occur, which is often completely beyond their control, the repercussions of which hurt them financially. Secondly, there's the 'career delinquents' who simply can't get their employment history together long enough to prove themselves a good risk to the lender.
LIFE EVENTS
Life events are typically one-off in nature but can have a devastating effect on personal finances, which can then lead to nasty marks being put against your credit record. The nature of these events is that they aren't likely to reoccur but nevertheless have given mainstream lenders a reason to doubt your commitment to a loan. Fortunately , not all lenders adopt this cut-and-dried approach and will take the time to ask exactly why you got into trouble in the first place.
There are five general types of life events that can lead to financial problems:
- Firstly, accident or illness may occur.
- Secondly, a sick child or relative might require constant care, and a partner who once provided a second household income may be forced to leave the workforce for an extended period of time.
- Thirdly, there's unexpected periods of unemployment, which can never be anticipated or properly prepared for.
- Divorce is also a common reason for credit problems to arise, particularly if one partner takes over responsibility for payment of a joint asset and then neglects to make a payment on time. Suddenly both partners have a blackmark against their names.
- Finally, there is small business failure, a common occurrence but one that makes mainstream lenders very apprehensive about opening the loan book of friendship?Non-Conforming Borrowers Don't Think you have No Choise
SELF-EMPLOYED
You can certainly obtain a home loan from a mainstream lender if you are selfemployed, but you need to supply volumes of paperwork and prove that you are just as financially stable as the office worker next door. If you've just started your own business, the chances are your lender is going to be a little concerned and may reject your application on the basis that they aren't convinced your business is going to succeed in the long term.
CONTRACT WORKERS
Contract and seasonal workers may have a significant annual income, yet many lenders get nervous because they see an employment history that jumps from one company to another, and possible stretches from state to state.
OLD AGE BORROWERS
While most people think that as they mature, lenders will treat them with more respect, once you hit a certain age, the reverse is often the case. You might be a 50 year old fitness fanatic, but when it comes to a home loan your lender is actually wondering whether you will be around to repay the money they have lent you. Borrowing money as you get closer to retirement age becomes more difficult, and lenders become a lot more concerned about your ability to generate the cash flow required to meet your repayments as they fall due.
At ACQUIRED we receive many letters and emails from people in these very situations, we have lenders who can help in almost every situation without costing you an arm and a leg remembering it cost you nothing to enquire at Acquired. |
