Information, money saving tips and commentary on Non-Conforming Loans in Australia

Non Conforming Loan

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What is a Non Conforming loan?

A Non Conforming Loan is designed for borrowers who do not fit the profile of the standard Australian borrower. Typically each loan is tailored to the borrowers individual circumstances.

Most non conforming borrowers belong to one of the following categories -
  • Self Employed
  • Variable Income
  • Credit Impaired
  • Low Deposit
  • Mature Age Borrowers
  • New Australian Residents
  • Australians living overseas
  • Security impaired
Most lenders do not cater for people in these categories because they are considered higher risk. As a result specialist lenders have sprung up to service this area. Because the lending risks are considered to be higher than normal, interest rates are also higher than normal and vary according to the perceived risk.

Once a borrower has demonstrated they can reliably service the loan over several years and they have established a good credit record, they may be eligible for a loan at standard interest rates.

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Non Conforming Loan

The Non Conforming Loan is essentially a tailored loan that is designed specially for the borrowers individual circumstances, unlike a standard loan that is "off the shelf", so to speak.

Non conforming lenders look at the borrowers debt repayment history, income, employment status and general credit worthiness. A detailed assessment is normally required before an interest rate, loan features and repayment schedule are settled upon.

Self Employed

Loans to self employed people are often referred to as "Low Doc" or "Lo Doc" loans because there is a reduced requirement for documentary evidence of income.

Generally a signed statement of income from your accountant will secure you a loan up to 65% of valuation.

Variable Income

People in this category include those who have changed jobs or vocations several times in the last couple of years and don't have the stable employment history and job continuity that most lenders prefer.

Casual employment tends to be more prevalent than full-time work these days and this can result in fluctuating income from several part time jobs. Traditional lenders are hesitant to lend under these circumstances.

If you can show evidence of good financial management of your income, responsible spending, and no long periods of lack of income you may still qualify from certain lenders.

Credit Impaired

If you have ever experienced bankruptcy, defaulted on a loan or had problems making loan repayments you will have little chance of obtaining a loan from a traditional lender. However if you have now got yourself back on a sound financial footing then specialist lenders will consider your application on its merits.

Low Deposit

Banks prefer that you have demonstrated a degree of financial competency by having personally saved at least 5% toward the deposit on a home as evidenced by your bank account records. If for example, you have a cash lump sum that was given to you as a gift or inheritance you may not qualify for a traditional loan because you have not met the competency test. Provided you have a steady income and no major debts then there are lenders who will lend under these circumstances.

Mature Age Borrowers

As you get older you have less time available to make repayments on a loan so obtaining a loan for say a 25 year term is not an option with most lenders. Repaying an average loan on a pension is just not feasible, so the closer to retirement you get, the harder it becomes to obtain a loan. Specialist lenders will consider your application on its merits if you can show that you can meet their requirements.

New Australian Residents

Having an established credit history that can be easily verified is an important part of qualifying for a loan in Australia. If you are a recent arrival in Australia it is unlikely that you will qualify for a loan from most lenders until you have been in the country for several years and established a credit record.

Australians living overseas

Most lenders have residency requirements to qualify for a loan. However many Australian citizens are living overseas and making good incomes which they would like to use to purchase investment properties back in Australia. There are lenders who service this market.

Security Impaired

Banks prefer standard residential property as security for loans. Other types of property and assets are not considered suitable by many lenders, but once again there are specialist lenders who cater to this market.

You can apply over the Internet and ask a Lending Professional for a free no-obligation quote on a Non-conforming Loan.


Thank you for visiting our Non-Conforming Loan web-page. We hope the overview has proved useful.

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