Non-Conforming Loans

Getting a Loan with a Default

A default means that at some time you have failed to pay a bill or a loan repayment and after exhausting every effort to get the bill paid or the loan paid out, the person to whom the bill was owed to has listed the outstanding bill on a credit record. It will remain listed on this record for some years, usually five.

Every person in Australia who has ever applied for credit (this means a credit card, a mobile phone on contract, or a rental property) has a credit file with Australia ’s largest credit reference file called Baycorp Advantage. This is a private organization that most lenders will refer to when you apply for a loan.

The details held by Baycorp Advantage are available to you. You can get a copy by visiting http://www.mycreditfile.com.au or calling (02) 9646 6000. There are instructions on their web site of what to do if you believe that an error has been made.

If you have a default listed, it does not mean that you can no get a loan. There are specialist lenders who will give you what is called a non-conforming loan. Often this will mean that the interest rate is somewhat higher than a regular loan, and there will be a limit as to how much you may borrow.

Your Mrs. Mortgage qualified broker will let you know if this type of loan is right for you, or what you should do to improve your credit rating.

Non Conforming Loans – What are they?

If you have experienced financial problems in the past, this is the loan to help you re-build your bad credit rating and obtain a mortgage. Non-conforming lenders are more flexible on some terms of the loan, and yet will require more discipline in others.

They will apply to individuals who may have a bad credit history, or have even been bankrupted. It is important to remember that the non-conforming loan will not be applicable to everyone with a bad credit history. The lenders will know that there has been a reason you got into the situation in first place, and will be looking for some mitigating circumstances, or evidence that something has significantly changed

Advantages

·You can get a fresh start and the chance to re-build your credit rating.

· Non judgmental lending rules with some flexibility.

Disadvantages

· You'll usually pay higher interest rates and fees than a typical loan.

· You will require a larger deposit than normal and evidence of real savings will be essential.

·There will be a limit as to how much you can borrow.

Mrs. Mortgage will help you to get into a new home loan if it is possible for you. Talk to me to find out what your options are.

Other Resources:

See other Mrs.Mortgage articles on bad credit here.

Download a free PDF book from the NSW Attorney General about debt here.

The Australian Governent has put together a booklet on Understanding Money. It has information and tips on budgeting, saving, investing, being in charge of your debt, superannuation, protecting your money, and how to get good advice. To get your copy of the booklet go to the website here.

It is strongly recommended that you engage the services of a good accountant to consider your individual needs.

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