What_is_a_Non-Conforming_Loan

What is a Non-Conforming Loan?

Every major bank has a standard set of rules that every loan application is measured against. It is the set of rules that will measure your suitability for a loan and will be the basis of the bank’s decision regarding your application. A non-conforming loan is a term used for loans which were designed for potential borrowers who do not fit the standard rules.

A non-conforming loan may also be referred to as a low doc or specialist loan, depending on who you are dealing with. Quite simply, the term non-conforming loan is a catchall for any loans that are made for people who don’t fall into the traditional rules. While you might not be overly familiar with the term, you will likely be surprised at the sheer number of Australians who have had their home loan applications rejected simply because they fall into the non-conforming category.

But, why? And, who falls into this category? There is a wide range of people who may fall into the rejection pile because they don’t measure up to the standard rules. This group of people includes self-employed individuals, those who have just recently started a new job, recently opened a new business, don’t have the perfect credit report, have been bankrupt (whether discharged or not), Australian Tax Office debt, a solid income but low deposit, a healthy deposit but low income, a gifted or inherited deposit, regularly changes job, or have a need for debt consolidation. There is also a risk of rejection if you’re a newly established Australian resident and you haven’t had time to build your credit file in the country.

So, as you can see, that covers quite a lot of the country, doesn’t it? Thankfully, the world has evolved beyond bank lenders and you may find a friend in an established non-bank lender like Seek Mortgages. Non-bank lenders design their home loan products around the people who need help securing home loans. This makes them far more flexible in their approach than traditional lenders. With a non-bank lender, you will work with a professional on a one-to-one basis to determine your state of affairs, as well as your needs, to ensure that you find a great alternative.

It’s easy to understand why so many Australians lose hope after dealing with the rejections of banks, but as you can see from the above there are a lot of people who don’t measure up to the standard set of rules they work with. You’re not alone and it’s not over till it’s over. Which is where a non-bank lender can lend you more than a helping hand. You’ll have someone to guide you through the process and find the right type of loan for both your circumstances and needs.

If you would like to learn more about what non-bank lenders can do for you or you just have questions that you need to be answered, get in touch with us today to discuss your options. A no from the bank isn’t the last no.

What_is_A_Low_Doc_Home_Loan

What is A Low Doc Home Loan and How Can It Help Me?

What is a low doc home loan? First of all, it’s proper name is low documentation or low documentation. It’s the type of mortgage that can be secured with different paperwork versus a full documentation loan.

While there may be plenty of people who benefit from this type of home loan, it’s particularly useful if you are self-employed. This might be the alternative loan option for you if you don’t have the traditional documents that lenders request, which is why it may benefit self-employed individuals. Typically, the self-employed find it more difficult to provide proof of income with standard documents. That doesn’t mean self-employed people should be kept from climbing the housing ladder.

The Low Down

Previously, low doc loans were exactly that, a mortgage you could take out with fewer documents. Once the global financial crisis struck, however, the lending rules tightened changing everything. It was no longer acceptable to lend to people with low documentation.

After the crisis, the National Consumer Credit Regulations were introduced in 2009, providing a challenge to how low doc loans operate. The biggest piece of the puzzle is that lenders can’t lend unless they meet the lender’s responsible lending obligations.

What does that mean today when it’s in action?

It means that every loan must pass the test showing the borrower can manage loan repayments. Due to these rule changes, the low doc loan became similar to a traditional full doc loan. The biggest difference isn’t the number of documents, but the type of documentation that can be used to satisfy the rules. Thus it’s new name the low doc loan! You will still have to produce a wealth of documentation, but a lender can be more flexible in what type of documentation they accept from potential borrowers.

For example, if you are dealing with a non-bank lender like Seek Mortgages and you are unable to produce up-to-date tax returns, there are other documents you can use to support your application. Non-bank lenders will look at your business activity statements, bank account statements, whether you’re business has been GST or ABN registered for 6 months at the least, and an accountant’s letter.

Of course, there are a variety of different products to peruse when considering a home loan and each of these will require different supporting documentation. This is why it’s important that you reach out and speak to the professionals who will guide you to the right home loan for you, whether you’re self-employed or otherwise. Contact us if you would like advice or just to learn more about what type of products may be suitable for you. We are happy to walk you through the documents you have, talk about what documents you might need, or which loan is more appropriate for your needs and available documentation.

If you want more information about low doc home loans, then get in touch with us today and allow us to find you a lender that will help you even if the major banks have said no.

Top_Tips_To_Save_A_Larger_Home_Deposit

Top Tips To Save A Larger Home Deposit

If you are thinking about purchasing your first home, then the knowledge that a 20% deposit is required can be overwhelming. That’s a lot and it takes time to save up that kind of money. It’s not all bad news, though, there are non-bank lenders like Seek Mortgages who can work with a deposit as little as 5% of the property’s purchase price. Of course, the higher your deposit, the more likely you will be successful in securing a home. However, let’s talk about how you can get your deposit saved up as quickly as possible.

The Budget

First things first, you have to decide how much money you can afford to put aside each month. There are online calculators to provide you with information on repayments based on the purchase price of the property and your deposit amount. That will give you a good idea of what type of deposit you will need to get a mortgage you can afford. There’s your target deposit.

The Aim

There are benefits to saving a larger deposit, from smaller monthly mortgage payments to your money-saving skills meaning you will need a smaller loan. A smaller loan means less interest to repay! It really is a win-win.

If you do save a 20% deposit, then you’ll avoid paying Lenders mortgage insurance costs. This fee is payable if you’re borrowing and having less than 20% deposit saved. Of course, a larger deposit also means you’re likely to secure a better interest rate. All in all, you save more in the long-term by saving more for your deposit now.

That covers why you should aim to save for a 20% deposit, but let’s get to the how.

Track & Budget

Do you know where every penny you spend each month goes? It’s time to start tracking it. There are plenty of apps that will help you keep track of your spending, if you use online banking and have an app, it may offer a breakdown. Start paying attention to what you spend and make a budget to tighten things up.

Savings Amount

Settle on an appropriate percentage of your monthly income to save monthly and commit to doing so. You should have enough to pay your bills and cover daily expenses and sock the rest away. How much of your monthly income should you sock away? If possible, 20%, but you will have to decide for yourself.

Show Your Work

You should use a separate savings account so you can show lenders you have a consistent history of contributing to your savings. Ultimately, lenders want to know you manage money well and you can show that by having a separate account.

If you would like to learn more about how much deposit you need and what options you have if you’re planning on less than 20% deposit, get in touch with us to discuss how we can help.

The_Top_7_Things

The Top 7 Things You Need to Know As a New Homebuyer

Better Positioned With A Bigger Deposit

It’s possible to find a lender who will provide you with a low-deposit loan if you have saved less than 5% deposit. However, there are major benefits that come from saving for that magic 20% deposit.

The 20% deposit will win you a wide pool of products and potential lenders.

A higher deposit means a lower loan amount.

A 20% deposit highlights your ability to manage money, which is one of the most important things lenders look at.

There are still options for you if you’re working with less than a 20% deposit, but they tend to be subject to Lenders Mortgage Insurance, which just adds more fees and checklists.

Pay Attention To Your Credit

Your credit rating will be used by potential lenders to judge your suitability for a loan. Non-bank lenders, however, review your total situation so your credit rating isn’t always the most important thing when it comes to securing the loan. It still matters, though, in any situation.

A credit score is linked to home loan application success. This is why it’s important to understand your credit rating and what goes into making it up. First things first, get a copy of your credit report and review your rating. You can review whether there are defaults against your name, mistakes in the information or someone else has secured credit using your information. If you catch any mistakes, you should rectify them immediately.

The Bottom Line

At this point, you likely know where you plan to buy and how much you are going to spend. Now is the time to determine how much you can afford to borrow reasonably. There are a variety of fees to consider, including legal fees, lender protection fees, and stamp duty.

Take your current situation into consideration, as well as income, expenses, dependents, and upcoming lifestyle changes.

Don't Sign Up If It Doesn't Fit

There is a lot to consider in terms of home loans, it goes beyond interest rates. There is a lot to consider and it’s important you understand what is right for you and if a home loan doesn’t fit, then you shouldn’t be signing up for it.

Research Hard

Research is going to be your best friend. The difference between dodgy deals and hidden diamonds is going to be down to your market knowledge. Something you can increase by doing your research. The more you learn about the market and where you’re buying the better off you’ll be. Take a look at the amenities, transport options, schools, rental returns, and the average house price over the last decade or so. You want to know the area and be sure it provides you with the lifestyle you want and offers the opportunity for growth.

Investment Opportunities

Sometimes the greatest property growth locations aren’t the up and coming suburbs. They’re the ones right next door. It’s a cheaper entry point that provides you with development potential. Likewise, if you plan to buy a brand new property or one that has been recently renovated, you’re going to pay a premium. While a lived-in home as is might not be as pretty, it’s better value. Plus, you can add your own personal touches and put your stamp on things properly.

Don't Bid Without Finance

If you are buying at auction, know there is no cooling-off period. If you make a bid and it’s accepted, the deal is done. If you haven’t received finance approval you are putting yourself in a dangerous position. Be safe and don’t make any moves until you have a letter of finance in your possess. Once you have approval you can negotiate without worry.

For first time buyers, these tips will be important if you want to make a savvy purchase. If you would like to learn more, get in touch with us to discuss your needs, circumstances, and options.

 

Is_Bad_Credit_a_Total_Barrier

Is Bad Credit a Total Barrier To A Home Loan?

There is a litany of reasons why your finances may have spiralled out of control. It may be a major issue like redundancy, chronic illness, acute illness, or divorce. It could also have been a one-off where you were overwhelmed by life and missed a payment that left a mark against your name. Whatever the cause, the result is always the same – you get lumped into the bad credit category. Even if you dig your way out of the hole and fix default payments or pay overdue bills, that black mark still stands against your name. So, while you view your credit clear because you have dealt with dealt, lenders might not look at it so kindly.

If that’s the situation you find yourself in now, then you might be feeling overwhelmed. Let us help you tackle the bad credit blues and help you figure out where you are now and where you stand for loans in the future.

What Is Bad Credit?

You may have told someone you have bad credit without understanding what that means. Essentially, bad credit is when you have a history of missing payments. The result of bad credit is that you will not find it easy to get approved for new credit or loans. Lenders tend to avoid people with poor credit histories because they are high-risk. Ultimately, lenders will be concerned about your ability to make repayments on the loan they furnish you with. If you have shown you regularly miss loan repayments or otherwise, then you aren’t necessarily someone who ticks the boxes they want to tick before they offer loans.

How Does Someone Get A Bad Credit Record?

There are several factors that contribute to bad credit.

  • Unpaid loan payments or bills
  • Exceeding your limit (credit cards or bank account)
  • A divorce/separation/breakup that has left you in debt
  • A debt agreement (part 9 or 10)
  • Taking unpaid time off work, whether due to illness or otherwise
  • Credit defaults registered against your name
  • Too many potential lenders running credit checks against your name

Do I have a Bad Credit Record?

The reality of the situation is that you probably don’t know if your credit record is bad unless you a) know you have a history of missed payments or b) have recently applied for credit or a loan. That’s generally when people receive the news that lenders have labelled them as non-conforming. You don’t meet the lending rules and it doesn’t matter whether you had major credit issues or accidental ones, you’re high-risk and that is that.

What's Next?

There is good news for you. There are non-bank lenders who may be able to help. Non-bank lenders offer a human touch to the work they do and recognise that sometimes there are circumstances beyond our control that result in credit issues. When you deal with a non-bank lender, you will speak to someone one-on-one as they learn more about your situation to find a solution that works for you.

If you have been rejected for a home loan due to bad credit, then it’s not over! You don’t have to wait to reapply either. There are options.

There are plenty of non-bank lenders like Seek Mortgages who can help. Likely, you will find a specialist loan that is suitable for your circumstances.

If you want more information about securing a home loan, then contact us to learn more about your options.

Discharged_from_Bankruptcy

Discharged from Bankruptcy and Trying To Secure a Home Loan? There’s Still Hope

If you want to discuss long and difficult processes, then bankruptcy recovery has to be at the top of, or at least near it, the list. Even when you have been discharged from bankruptcy or completed your debt agreement, there are lenders who will reject your application immediately. They aren’t interested in your current circumstances, they look at your history and they’re not willing to take the risk. Banks have a set list of rules that borrowers have to measure up against, they’re not particularly interested in your unique case or the circumstances that may have led you to this point.

It might seem like a lost cause, but that isn’t the reality of the situation. There is still hope for you yet! There are plenty of non-bank lenders out there who are happy to sit down and learn more about your circumstances and discuss your options. Non-bank lenders like Seek Mortgages are well-established in the industry and are passionate about people. Seek doesn’t believe that bankruptcy should stand in the way of you owning a home. That’s why they have designed a variety of products specifically to assist those with credit issues or who have been discharged from bankruptcy.

Bankruptcy shouldn’t remove your opportunity to own your own home, and non-bank lenders understand that mistakes happen. A non-bank lender will sit down and have a one-on-one conversation about the circumstances that resulted in your situation, the steps you have taken to rectify the issue, and what type of position you are in now. Progress matters to non-bank lenders in a way it doesn’t matter to traditional lenders.

There are still plenty of solutions available to you if you have entered a debt agreement or already been officially discharged from bankruptcy. With so many solutions available, you are sure to find one that works for you and for the lender, too. In certain situations, a lender may be able to assist you in finalising a debt agreement as an aspect of a debt consolidation feature in a home loan. You might not have known that was possible, but it is!

The point is that even when all hope seems lost, the truth of the matter is that all hope is never lost. You simply have to consider alternatives like non-bank lenders to pursue a different route to achieve the same result. Whatever your case looks like, there is no harm in reaching out to discuss your situation. The more information you provide us with, the better we can assist you in finding a home loan that suits your needs. We want to know what you need, what your situation is, how your credit problems occurred, and what’s happened in the time since then to ensure you are in a good position to secure a mortgage and make the necessary repayments.

If this sounds like assistance you need, then there’s no time to waste! Get in touch with us today to discuss your options.

A_low_doc_Loan_Might_Be_Right

A low doc Loan Might Be Right For You If You’re Self-Employed

Are you self-employed? Do you own your own business? Then you know the unique challenges that the administrative side of things offers when it comes to tracking your flow of income, managing accounts, and dealing with finances. It isn’t easy and the last thing anyone needs in this type of situation is a big fat no rubber-stamped on a home loan application. The biggest reason for the rubber stamp of rejection is paperwork. It sounds like all bad news, but it isn’t! There is plenty of good news for self-employed borrowers. You have alternatives.

Deal With Your Paperwork

When a lender reviews a home loan application they are looking for certain things. First of all, they want to see regular income. They’re looking for borrowers who can make repayments. You can prove you’re that candidate by providing paperwork that shows you have been self-employed for a specific length of time and that your income is regular. This will help you demonstrate your case.

Paperwork can be a challenge for the self-employed, however, which means if you don’t have the standard documentation that lenders demand a low doc loan may come to your rescue. You will still need a wealth of paperwork to secure the loan, but it’s paperwork that deviates from the norm. With a non-bank lender like Seek Mortgages, they will look at whether your business has been GST and ABN registered for six months at least, they’ll want to see an accountants letter, business activity statements, and/or business bank account statements.

Keep Track of Cash Flow

A financial plan will help you manage and track your cash flow. This is a good idea if you’re self-employed. If you pay off any outstanding debt it will have a positive impact on your cash flow, as well as your credit score. This means you will find some lenders willing to approve a higher loan amount.

Trust The Lenders Experience

You have to be prepared to be upfront and honest with your potential lender from the get-go. If there are major variations between taxable income on your financial statements from one year into the next, then be prepared to discuss the reasons. Alternative lenders like Seek Mortgages are experienced with all kinds of borrowers and are more than familiar with evaluating a wide range of cash flows.

Get Help With Taxable Income

Perhaps the biggest challenge that the self-employed face when securing a home is taxable income. You need to think about how the financial statements of today could impact your borrowing potential in the future. Your best bet is to speak to a tax professional or financial advisor when you address taxable income.

These are just a few ideas and points highlighting the flexibility of low doc loans for self-employed borrowers. You have plenty of options, whether you realised it or not. If you haven’t been successful with bank lending, all is not lost!

If you would like to learn more about low doc loans, or any other type of loans, then get in touch with us today to discuss your options.

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7 Hot Tips If Your New Year’s Resolution Is To Get A Mortgage

As the holiday season approaches, surviving Christmas is difficult enough without having to think about the New Year, too. However, if your eyes are on the prize and you plan to make your resolution to buy a new home, we have some tips to improve your shot at securing a mortgage.

1. Deal with Debt

If there’s a good time to pay down your debt and avoid new debt it’s New Year. As tempting as the sales might be, it’s time to think again. You have a new priority and it’s buying a home. Pay your bills on time because every lender will review your credit file closely. They must see you are capable of making loan repayments, which means you have to make the rest of your repayments on time.

2. Check Your Credit

Soft credit checks don’t impact your score. A hard check, which is what lenders do, does affect your score. You are entitled to check your credit for free and you should do so to ensure it is accurate.

  1. Ensure your name and date of birth are accurate
  2. Ensure your address is listed correctly
  3. Check if any debt has been listed incorrectly or more than once
  4. Check whether you have missing repayments against your name
  5. Check to ensure your identity hasn’t been stolen to secure credit

If you notice any mistakes, now is the time to have them fixed. You can check your credit score on the money smart website

3. Secure Your Documents

The more documentation and information that you provide when you apply for a loan, the greater your chances are to be approved. Keep your loan and credit card statements, savings record, payslips, and tax returns.

4. The Options

There are a plethora of mortgage options available, from fixed and variable to interest-only or principal and interest. It’s important that you know which features work for you and what each loan costs in fees.

5. No Sudden Moves

Don’t leave your job, apply for credit cards, start a business or make any sudden moves when you begin the buying process. Or, in the run-up to it. You might think it’s time for an exciting change, but to a lender, it looks like a high-risk borrower. Don’t worry if you’re already a business owner or self-employed, as long as you have plenty of paperwork. With non-bank lenders like Seek Mortgages, you can secure a low doc loan.

6. Genuine Savings

For lenders, it’s important to know borrowers are capable of saving. You must have separate savings account to show your ability to do this. If you are capable of socking away more than 5% deposit in a separate savings account, then you are a likely candidate to repay your home loan. That’s what genuine savings is viewed as, along with regular contributions.

7. Research

If you have already received a no from a bank, don’t give up. There are still non-bank lenders who may have your back. They don’t rely on preset lists of rules and look at your circumstances and situation as a whole.

If you would like to learn more about how we can help you secure a home loan, then contact us to discuss your options today.

5 Top Tips For Sorting Out A Home Loan Application

5 Top Tips For Sorting Out A Home Loan Application With Credit Issues

There are a variety of factors that affect your credit history – divorce, illness, timing slips, redundancy, late payments, missed payments, and even bills that weren’t redirected after a move. If you have experienced any of these credit issues, then all is not lost for your loan application hopes. There are plenty of options you have to help get your credit back on track to successfully apply for a loan.

1. Deal With Your Credit Report

So, who should be considering buying a property in the current market? Quite simply, people should only be considering property purchases who have the safety net of a secure job, along with either enough money saved or other liquid assets.

Some will see this lower market as an opportunity to purchase property at a price that is materially much lower than it was earlier this year. Then there are those brave cashed-up people who believe that times like these are when fortunes can be made, and they hope to secure a property at once-in-a-generation bargain prices. And who knows, they could very well be right on the money.

It is actually quite likely that some excellent opportunities to buy will become available over the coming months, especially during the second half of this year. That means there are some savvy investors who are ready to buy, in preparation for a predicted rebound next year.

2. Shop Around

If you received a no from the first potential lender you approached, then try and try again. There are plenty of lenders available and just because one said no does not mean they will all say no. Lenders have different boxes to tick, so another lender may view your situation more favourably than the first.

Of course, it’s always smart to shop around no matter what you’re doing or looking for. Do remember, however, that if you submit multiple credit applications in a short period of time it can negatively influence your credit score. Proceed with caution, and if you want to avoid traps you should consider working with professionals like Seek Mortgages.

3. Explore Alternative Lending

If your credit issues are the only thing holding you back, you may find joy with a non-bank lender that offers more flexible products. The banks stick to fixed rules when it comes to loan assessments. The world has evolved since then and lenders like Seek Mortgages provide a different path to loans using a wider set of parameters.

4. Affordable Payments

It doesn’t matter who you secure your loan with, the lender is responsible for ensuring you can afford to make the agreed repayments. It isn’t worth getting into hardship so ensure you are able to meet the repayment demands.

5. Options

If your deposit is less than 20%, you will likely have to pay an LMI (Lenders Mortgage Insurance) fee. It provides the lender with cover if you miss payments at any point. They’re a separate business with their own rules. Income source and credit history may leave you at risk of rejection, even if the lender has approved the loan. There is another way, of course. Third-party insurers and lenders like Seek Mortgages offer LPF (Lender Protection Fee to provide flexibility to assess the loan without requiring LMI provider approval.

If you would like to learn more, reach out to Seek Mortgages today and talk to us about finding a lender that will help turn your no into a yes.

Why A Home Loan NO Might Not Be The Final Answer

Why A Home Loan ‘No” Might Not Be The Final Answer

If you have ever been turned down for a loan, there’s a good chance you’ve asked why? Why did you get turned down?

Lending rules can change so if a bank has rejected your loan it might simply be a reflection of their credit policy. Of course, that credit policy may have shifted as it often does due to market conditions. So, in times of economic certainty you may have had an easy time securing a home loan versus now when the world isn’t as certain therefore it’s a greater challenge. This isn’t the only reason, there are plenty of reasons your home loan may have been rejected. It’s important, however, to remember that a no might not be the final answer.

1. Cross Your T's

Lenders want to see regular income. If you’re self-employed, that may present an issue. If you have irregular earnings, multiple jobs, or unusual income, then this sits outside of the traditional boxes that lenders look to tick.

2. Credit History

Another big issue for rejections is credit history. Your credit history is your biggest obstacle to overcome if your past is spotty. Conventional lenders use an automated process to score credit. Your application may be rejected simply because the computer says no.

3. Poor Paperwork

If you don’t have the right paperwork or present a poor standard of paperwork, this can influence whether your home loan is rejected. Your tax returns must be up-to-date, especially if you’re self-employed, If you are new to the country, then a lack of employment history may also go against you.

4. Bankruptcy

If you have previously filed for bankruptcy, then this is a red flag for traditional lenders. You might think you’re in the clear as you’ve been discharged, but it’s still something they consider.

There are plenty of reasons for your home loan to get knocked back, but what do you do about it?

The Alternative

There is good news! The world has evolved and now you have options beyond traditional lenders. Forget the banks who keep knocking you back, there are non-bank lending options that provide you with a personal approach to secure your home loan. These are big organisations like Seek Mortgages who exist solely to help people who have received a no.

Your application will be evaluated individually by an expert. The underwriter will look at a series of measures and consider the merit of you as a person, instead of allowing a computer to reject you. There is always an alternative available, especially if you have a poor credit history, unusual income, or any of the other issues we discussed above. The rejections you have experienced thus far may have knocked your confidence, but you don’t have to accept the first rejection and wait to apply again. Instead, you can opt for the non-traditional route before giving up altogether.

If you want a bit more information about what we can do to help, reach out and speak to Seek Mortgages today to find a lender who can help turn your home loan application from a no to a yes.