In the past, lenders considered default history as the most damaging thing for a home loan. They rejected home loan applications of people with defaults in the past. But, today the condition is different. Fortunately, there are some lenders and credit providers who offer home loans to people with default history. Such loans are called non-conforming home loans.
Non-Conforming Home Loans
Non-conforming home loans are the same as regular home loans. But, owing to the extra risk involved, you will most likely have to pay an increased interest rate.
The Criteria to Get a Non-Conforming Home Loans
Non-conforming home loans are only available if you can meet the following criteria:
1. You should not be in bankrupt or taking advantage of a part 9 creditor agreement within the Bankruptcy Act. (You can however apply for a non-conforming home loan the day you receive your discharge from such restrictions).
2. You need to put together a minimum deposit of 20 per cent (or have 20 per cent equity in the property that you want to refinance). The maximum non-conforming home loan is 80 per cent of the property value. However, any First Home Owner Grant (FHOG) that is available to you will form part of your deposit
3. 20 per cent deposit is mandatory even when you have a guarantor. Likewise, it a large salary will not give you relief from the deposit amount.
4. You will be required to find money to pay any stamp duty and other costs that outside the loan allocation funds.
5. You should have sufficient ongoing income to service the loan repayments. (Usually people on pensions or those who are unemployed cannot obtain a non-conforming home loan).
What Information should be provided to a Non-Conforming Lender?
Lender will look at all the red flags in your credit file. So, if you try to hide something from the lender, you will not improve your ability to get a low rate home loan. In fact, you will simply make the lender more suspicious. It may also lead to your application being declined because you were not transparent enough or fully honest about your circumstances. So, be transparent and open about each and every entry appearing your credit file.
So, next time you venture to out to get a non-conforming home loan, remember to be clear about your financial details. Do keep in mind the other points mentioned in this article. It will ensure stress-free approval.
Singh Finance is the perfect Australian brokerage firm for bad credit buyers. It not only offers bad credit home loans with default history but also provides quick approval on home loans for discharged bankrupts. Call on 0424 190 908 for more information.
