Non-Conforming Property Loans Australia

Non-conforming Property Loans are available to borrowers who do not meet the conventional lending criteria.

Complete credit guide relating to low doc bad credit  loans and no doc subprime finance in Australia, differences, cons and pros, and how loans work?

One in five Australians requires a non-bank loan since they cannot obtain credit from a traditional lender. Often this may be due to tightening lending criteria, the risk profile of lenders, change of bank policy, or automatic decline by credit score or mortgage insurance, bad credit or for the Self Employed Australian. No doc loan may be available to Australians who have bad credit or cannot prove their income through traditional means.

Non Conforming Home Loans

So, if you’ve been finding the Banks won’t consider your finance application – it doesn’t mean you’re out of options.

How should I evaluate a non-conforming lender?

The interest rate is always significant. When looking at a non-conforming lender, you should also look at the application fees or entry fees like these, which at times could be higher than most normal loans. Also, look at the exit fees if a person were to leave or refinance within a certain period. Within the first three years, non-conforming lenders could charge high exit fees.

A home loan can often seem out of reach for those with low credit scores or financial needs that are a little out of the ordinary. Many lenders offer loans called ‘non-conforming loans for people in this situation.

Despite lending companies’ willingness to overlook prior credit problems, they will still need to see some evidence that you will be able to pay off the loan. You may also need a larger deposit.

Listed below are some signs that you might not be a ‘perfect fit for some lenders:

  • You don’t have an outstanding credit score (e.g.insolvency, unpaid bill, default in the past)
  • You have substantialrevenue, but a smallsum of money fora deposit
  • Irregular employment
  • You need to action debt consolidation plan
  • Starting a new business venture
  • You don’t have updated financial statements

There are still options, even if the banks have said no. 

Non Conforming Home loans image 2

What are the pros and cons?


  • May ignore low credit score
  • Can access a lower rate as time goes by


  • Higher interest rate than traditional loans in recognition of the higher level of risk
  • A more significant deposit than is required for traditional loans
  • May also require stricter repayment conditions

Non-conforming loans FAQs

What is a non-conforming lender?

Who are the lenders?

Non-bank lenders entered the market in Australia in the late 1990s and began offering loans that did not fit traditional bank criteria or boxes. Lenders who provide non-traditional loans are known as non-bank lenders.

Today, over 220 private and major non-bank lenders in Australia offer loans that don’t fit the lending criteria of significant lenders like banks or credit unions. It is worth noting that not all non-bank lenders are non-institutional, and private lenders should not be confused with non-bank lenders.

Is it a non-conforming lender for me?

As a general rule, a non-traditional funder is a type of lender who lends to or is opposed to:

  1. Bad creditborrowers
  2. People with uncommon income streams like casualwork or seasonal work
  3. Newly arrived migrants in Australia
  4. Specialised security
  5. Postcode restricted areas
  6. Borrowers who require specialised or structured loans

Subprime lenders are non-bank lenders and makeup approximately 5% of the market. Even though many significant lenders offer private loans like low doc or no doc loans, private lenders provide low doc loans to people with bad credit. Low doc loans are non-traditional loans. Nevertheless, low doc loan lending has been regulated with the new National Consumer Credit Protection Act (NCCP). Both the lender and the borrower have fewer risks as lenders now ask for more information on the borrower’s affordability position. Look at a borrower’s business activity statement (Please refer to Low doc with BAS and Low doc without BAS). There has been a significant drop in defaults and arrears among borrowers who take out non-conforming loans.

Non-conforming loans are more expensive. It depends on the quality of the application. If a person takes out a non-conforming loan with an extensive bad credit history, they will likely pay between 1% and 5% more.

In many instances, a  person can take a non-conforming loan with good income streams and decrease the price difference between it and a regular loan. Typically the rate is only 0.1% – 0.5% higher than a traditional loan, which is too small to argue, given that this person can now raise a decent amount of money 

Commercial and residential loans can be made up to 70% LVR by a non-conforming lender.

By utilizing Zip Funding products, you can receive quick, sound descions on loans that are not based on your commerical credit, but by analyzing your target market to get a deeper look at your financial standing.

Call us today to secure your special rate!

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