Home Finance For The Credit Challenged
Tuesday, March 11th, 2008 Subscribe To Our Feed
There is a category of mortgage loans available for those with a below par credit record who wish to purchase their own home. This category of mortgage loans is called sub-prime lending, but is also referred to as non conforming lending in some markets. This type of mortgage loan has only come into being in Australia since about 1997. The need for an alternative existed because of the rigid lending guidelines of conventional lenders. An increasing proportion of the workforce have been shifting to part-time and casual employment, and were failing the traditional lending criteria.
To give an example, recent statistics indicate that Australia has some two million part time, casual and contract employees. In addition to this, almost 1 million Australians are self-employed, and these borrowers were also failing the criteria as a result of a lack of demonstrable income records.
800,000 workers are above the age of 55, and finance companies are resistant to lending a twenty five year home finance to more mature applicants. There are also some three hundred thousand people with credit defaults listed on their credit file. Add to that one hundred thousand new immigrant arrivals every year without a previous credit history in Australia, and 25,000 new bankrupts each year, with a similar number being discharged from bankruptcy every year.
All of this adds up to the obvious need for an alternative form of home finance with more flexible criteria to cater to these groups of people. Additional information about the different categories and providers of these more flexible forms of home finance can be found in the following non conforming lending article.
For a more wide ranging and thorough review of all the different forms of home lending including all the full-doc loan types, as well as lo doc and no doc loans, there is an additional article on that website on the various types of home loans. When making a choice of a loan type, it is prudent to take into account factors other than the interest rate. As a rule of thumb, the more features and flexibility that a loan has, the more elevated its interest rate will likely be, but the flexibility can be a blessing over the long term as it enables you to structure your payments for mortgage minimization purposes, either by making your payments bi-weekly as opposed to monthly, or by enabling you to add periodical lump sums into your loan, or to offset the interest on a percentage of the balance of the loan by depositing your income or other monies into an offset account.
If the subject matter of mortgage minimization is of interest to you, I highly recommend that you check out the Mortgage Cycling Revealed ebook by Craig Romero. A link to Craig’s website can be found behind the corner peel away ad image in the top right hand corner on the above webpage.
Greater information on the different types of mortgage finance available, both sub-prime (non-conforming), as well as standard full-doc, lo-doc or no-doc loans, as well as comprehensive tips on mortgage minimization can be found on the FinanciallyFree.com.au website.
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