Mortgage Finance Options

There is a category of finance available for those with a poor credit record
who wish to purchase their own home. This finance is called sub-prime lending,
but is also referred to as non-conforming lending in some markets. This type of
finance has only come into being in Australia since about 1997. The need for an
alternative existed because of the rigid lending guidelines of conventional
lenders. An increasing proportion of the workforce have been switching to
part-time and casual employment, and were failing the traditional lending
guidelines.

For example, recent statistics show that Australia now has some two million
contract, casual and part-time workers. In addition to this, nearly one million
Australians are now self-employed, and these borrowers were also failing the
guidelines through lack of demonstrable income records.

Eight hundred thousand workers in Australia are over the age of fifty five, and
the banks don't like to lend a 25yr mortgage to more mature applicants. There
are also some three hundred thousand people with credit defaults listed on their
credit file. Add to that one hundred thousand new immigrant arrivals each year
with no past credit history in Australia, and twenty five thousand new bankrupts
each year, with a similar number being discharged from bankruptcy each year.

All of this adds up to the need for an alternative form of lending with more
flexible guidelines to cater to these groups of people. Further information
about the different categories and providers of these more flexible forms of
finance can be found in the following
Non-Conforming
Lending article. It should be stated that there are other alternatives to
purchasing a home that do not require one to obtain a mortgage at all. An
increasing number of people are choosing to purchase homes on a
rent to own
lease-option basis, or by using
vendor financing, also
known as wrapping.

For a broader and more comprehensive overview of all the different forms of home
lending including all the full-doc loan options, as well as lo doc and no doc
loans, there is a further article on that website on the
Different Types of
Home Loans. When selecting a loan type, it is wise to consider factors other
than the interest rate. As a rule of thumb, the more features and flexibility
that a loan has, the higher its interest rate will be, but the flexibility can
be a blessing in the long term as it allows you to structure your payments for
mortgage reduction purposes, either by making your payments fortnightly as
opposed to monthly, or by allowing you to add ad-hoc lump sums into your loan,
or to offset the interest on a percentage of the balance of the loan by parking
your salary or other savings into an offset account.

If the subject of mortgage reduction is of interest to you, I highly recommend
that you check out the Mortgage Cycling Revealed ebook by Craig Romero. There is
a link to Craig's website on the following
Mortgage
Reduction webpage.

More information on the different mortgage types available, both non-conforming
(sub-prime), as well as conventional full-doc, lo-doc or no-doc loans, as well
as comprehensive tips on mortgage reduction can be found on the
FinanciallyFree.com.au website.