Mortgage Reduction
Thursday, March 20th, 2008 Subscribe To Our Feed
There is a category of mortgage loans available for those with a less than stellar credit record who want to acquire their own home. This category of mortgage loans is called sub prime lending, but is also referred to as non conforming lending in some market segments. This type of mortgage loan has only come into existence in Australia since about 1997. The need for an alternative existed because of the rigid lending guidelines of most lenders. An increasing percentage of the workforce have been shifting to part-time and casual employment, and were failing the traditional lending guidelines.
To give an example, recent statistics indicate that Australia has some 2 million casual, contract and part time workers. In addition to this, nearly one million Australians are self-employed, and these borrowers were also failing the guidelines due to a lack of evident income records.
800,000 workers are over the age of 55, and financiers are resistant to lending 25yr home finance to more mature applicants. There are also some 300,000 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 twenty five thousand new bankrupts every year, with a comparable number being discharged from bankruptcy every year.
All of this adds up to the obvious requirement for an alternative form of home mortgage finance with more flexible guidelines to cater to these various groups of people. Further information about the different categories and providers of these more flexible forms of home mortgage finance can be found in the following sub-prime loans article.
For a broader and more comprehensive overview of all the different forms of mortgage finance including all the full-doc loan options, in addition to lo doc and no doc loans, there is a further article on the financiallyfree website on the Different Types of Home Loans. When choosing a loan type, it is advisable to consider factors other than the interest rate. As a general rule, the more flexibility and features that a loan has, the higher its interest rate will likely be, but the flexibility can be a blessing over the long term as it allows you to structure your payments for mortgage finance elimination purposes, either by making your payments fortnightly instead of 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 parking your salary or other savings into an offset account.
If the subject of mortgage minimization is of interest to you, I highly recommend that you look into the Mortgage Cycling Revealed ebook by Craig Romero. A link to Craig’s website can be found behind the peel away ad graphic in the top right hand corner on the above mortgage reduction webpage.
More 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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