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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.

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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.

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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.