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What Is A Non Conforming Home Loan?

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A mortgage created for people with bad credit.

If you have a bad credit history you’ll generally find it difficult to get a mortgage through the traditional lenders. But don’t give up hope. The non conforming home loan was created for people in your situation.

Bad credit history

One of the factors a lender considers in assessing your mortgage application is your credit history. If you have a poor track record in meeting your credit card or other loan repayments, you will generally be considered at increased risk of defaulting. This could mean you’ll pay a higher interest rate or they might reject your mortgage application altogether.

Non conforming home loans – a bad credit option

Just because you have a bad credit history doesn’t mean that you will default. Many financial institutions have recognised this and so they have made available the non conforming home loan. This has enabled people with a bad credit history and even recent bankrupts to take out a mortgage.

Non conforming home loans – higher risk, higher rate

Since you are considered a higher risk, the Lender will typically charge you a higher interest rate for a non conforming home loan. The greater the risk, the higher the interest rate. While you’d obviously prefer to pay a lower interest rate, a non conforming mortgage at least lets you get back in the game.

Non conforming home loan – improve your credit rating

With a non conforming home loan, many lenders might start you off on a higher interest rate, but if you meet your repayments for an agreed period, they’ll reduce that rate. A non conforming home loan can be a good way for someone with a bad credit history to improve their credit rating. To learn more about non conforming home loans, contact us on 1300 888 903 today.

 

Sources:

Reproduced with the permission of the Mortgage and Finance Association of Australia (MFAA).

Important:

This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee, AMP Financial Planning Pty Limited. Neither our business, nor AMP Financial Planning Pty Limited take any responsibility for their action or any service they provide..

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