Who are ‘non-conforming’ loans for?
There is a growing number of finance providers making credit available to borrowers who cannot secure finance in the conventional way, that is, by meeting the borrowing standards normally required by banks and other home lenders.
If you're in any one of the following categories, the alternative finance market may be your only borrowing option:
- Low documentation, or ‘low-doc'
Borrowers having difficulty documenting their financial position, eg. Self-employed, especially if for less than three years, and others with a short borrowing history.
Borrowers wanting to buy a property in Australia but do not meet the residency requirements of Australian mainstream lenders, ie. Australian citizens living overseas or non-Australian residents.
- Unstable income
Borrowers with infrequent or variable income whose ability to service a loan is less certain, eg. self-employed and casual workers. Pensioners, other welfare recipients and low-income earners may also fall into this category.
Borrowers with an adverse credit history of default on loans, a record of late payment or who have been bankrupt.
Borrowers wishing to borrow more than 90-95% of the purchase price of a property, ie. with a high loan-to-valuation ratio (LVR).
Borrowers wishing to secure their loan against properties that would not normally be considered appropriate security, eg. company title units or serviced apartments.