A non-conforming or ‘Specialist’ home loan is a loan that does not fit a lender’s standard criteria for a home loan. These loans are usually offered to people that have a bad credit history or extraordinary financial needs.
Because non-conforming home loans differ from the norm there are a few differences you need to understand and keep in mind.
Just like a traditional home loan, non-conforming loans can have a fixed, variable, or split-interest rate. Where non-conforming home loans start to differ is in fee structure and the level of the interest rate. Lenders usually take on more risk by offering non-conforming loans, so fees and interest rates tend to be higher to offset the increased risk.
It’s worth noting that some lenders may offer you reduced rates midway through the loan if you have been making your repayments on time.
Not needing a good credit history to be approved for the loan is one of the main advantages of non-conforming loans. The downside is the higher interest rates and potentially stricter repayment conditions.
Non-conforming home loans are an excellent option if you’re struggling to get approval for standard home loans. You do not need to have a perfect credit history, job stability or a large deposit to apply for a non-conforming home loan, as there are non-conforming home loans for many different circumstances.
If you would like to learn more about non-conforming loans, please contact us today.