Non-conforming loans do not conform to a lender’s typical lending criteria. This may include situations where the applicant has a poor credit history, recently started a business or a new job, been previously bankrupt, has an ATO debt, nearing retirement or recently arrived in Australia with no previous credit history.
There are a handful of specialist lenders in Australia, who have products to suit non-conforming borrowers. The advantage of a non-conforming loan is that clients can restart their financial activities. This helps them to rebuild their credit history. Disadvantages include higher fees and higher interest rates. But if these can be managed by borrowers for a short period, usually about a year, they may re-enter the traditional home loan market.