Loans in the market - Non Conforming Loans.

One of the greatest misconceptions of the non conforming loan market is that it is for people who have poor credit. This segment however is only a small percentage of the non conforming market. The best way to look at non conforming loans is as loans that cater for people who are outside the guidelines of the traditional lenders. This can be a variety for reasons that include large housing loans, no real evidence of income, no history of income, people starting out in a new business, high loan percentages in comparison to security, impaired credit history, debt consolidation and limited saver deposit.

The most important aspect to remember is that with risk comes higher additional cost. Apart from higher interest rates, non conforming loans can also include the following conditions that may not be reflective on conforming loans.

• Higher set up costs
• Limited loan features applicable to conforming loans
• High leaving costs
• Strict repayment conditions
• Lower borrowing based on a lower loan to value ratio (LVR)