What is a non-conforming loan?

All the major banks have a standard set of rules they use to decide if a loan application is acceptable, or not. A ‘non-conforming’ home loan is simply a term used for home loans designed for people that don’t fit those rules.

Loans like these can also be called ‘specialist’ or ‘alternative’ loans (alt doc). Non-conforming may not be a common term, but you might be surprised how many Australians have been declined for a home loan because they fall into this category, and why. For example, people who are:

  • Self-employed
  • Have recently started a business or a new job
  • Don’t have a perfect credit history
  • Been previously bankrupt
  • Have an ATO debt to pay-out
  • Have a solid income, but not much of a deposit
  • Have a deposit but it’s an inheritance or a gift
  • Work means they regularly change jobs, it looks like instability but it’s just the nature of the industry
  • Need to consolidate debts such as personal loans, credit cards or business debt
  • A new Australian resident, and therefore the previous credit history can’t be established.

That’s a lot of Aussies. The good news is that in today’s world there are lots of options. Well-established non-bank lenders like Pepper Money have designed home loan products specifically to help all these people. They take a much more flexible and holistic approach to traditional lenders and can provide a range of good alternatives.

If you’d like more information talk to us today about how we may be able to put you in touch with a lender that can help if the major banks have said ‘no’ to your loan application.

Disclaimer: Original content source: Pepper Money. It is designed for publication through Accredited Brokers, to provide you with factual information only, and it is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, but neither Pepper nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on +61 2 9968 5000.