Loan options for something different

There are many reasons why people do not meet traditional lending criteria and sadly many people miss out on their dream home because they believe the bank said no, so there are no other options. The solutions are difficult to find without the assistance of a good quality mortgage broker so make sure you seek the right advice before you give up on owning your own home.

Bad or Poor Credit History?

Small telco defaults up to $500 are generally acceptable but loan defaults like credit cards are not. Most mainstream banks take a hard-line approach to bad credit but a few lenders don’t. Providing good income, savings and a reasonable explanation of the poor history is shown, it is possible to get a home loan approved. Higher fees and rates are likely though.

Finding the right solution is more important than finding the cheapest deal. Some examples of poor credit that can be considered:

  • Discharged Bankrupt 1 Day
  • Paid Defaults
  • Unpaid Defaults
  • Current Mortgage Arrears
  • ATO Debts
  • Insolvency

Different Income Types?

Some people have unusual income that as not acceptable to mainstream lenders. This is frustrating as income can be proven but the bank just won’t accept it because it is unusual.

Some unusual types of income:

  • Certain Overseas Income
  • Short Term Business Income
  • Irregular Overtime
  • Certain Government Pensions
  • Multiple Jobs
  • Contract Income

There are many options available for clients who have been declined because of the type of income received.

Different Security?

The one universal aspect of lending is the type of security to be used for the loan. The lender seeks to minimise losses in the event of a forced sale. The resale on a standard 4brm house is much higher than say a small unit in a resort complex. The lender is more likely to avoid losses when selling a standard home over a non-standard one.

Some non-standard types of security:

  • Large Acreage >100acres
  • Remote Locations
  • Small units <40m2
  • Resort Complexes
  • Multiple Homes on 1 title
  • Student Accommodation
  • Mixed Use
  • Unusual Zonings

Most concerns with security can be overcome by a larger deposit. The more unusual the property the larger the deposit needed. Surprisingly the bigger the bank, the more likely they are to accept unusual securities.

Different Deposit?

The majority of lenders need a minimum of 5% genuine savings. This is cash saved or held in the bank for 3mths but it is a challenge to save whilst paying rent.

Some lenders will accept non genuine savings like:

  • Gift from Parents
  • Tax Return
  • Sale of Assets (Vehicle)
  • Borrowed Funds
  • Cash in Business

The interest rate can often be the same but the cost of Mortgage Insurance increases slightly if the deposit is non genuine.

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