Non_conforming lenders

[Property Invest]

Im currently looking through some non-conforming lenders in the market who wont take into account credit defaults.
I have come across one lender which looks ok but wanted to know whether anyone else have used this type of lending before, what rates they payed, your thoughts on them, and/or whether you know a good deal out there presently?

Thanks

 

[tobe]

the 'good deal' is getting finance with a default.....


Dont expect good interest rates, or light fees and charges. Its rate for risk, and the risk heightened after the GFC. We are lucky to still have access to non conforming lenders.

that said a couple of the majors will look at small paid defaults with a good explanation and mitigating circumstances, so its worthwhile investigating whether you might be able to get finance through normal channels first.

 

[Jamie M]

As Tobe has said - the luxury of shopping around for the best rate is generally thrown out the window when you've got credit defaults listed on your file.

If the default is relatively small and explainable, you might get it approved my a mainstream lender.

For non-conforming, Pepper and Paramount spring to mind.

Cheers

Jamie

 

[Property Invest]

yes agreed, getting the finance with a default is a good deal. Some want to charge in excess of 10% whereas what i have been able to find at the moment is 8.69%. That's pretty good considering my choices and circumstances.
Im aware that a good story (explanation) for each default may help here but the number of defaults and amounts will not, no matter how good i am at story telling. Even though all defaults are now settled, they remain as defaults paid on my credit report. They do not remove them. I have a couple of years left before they drop off entirely. Simply my fault,and only one to blame.
Im not sure any of the normal lenders would give me a look.

 

[Mick C]

Depends on;

1. What sort of default
2. When was it listed
3. Outcome ( is it still listed as unpaid?)
4. Who the notice is from...one from some telco are overlooked by most lenders ( especially one from the old One tele)
5. How much are the defaults?
6. How many..

Sorry the post probably provides more questions then answers....but it's hard to give a solid answer without some data.

Generally speaking the rates are more, as you would expect....
But i would be very very careful on who you choose; as it's not easy to "refinance" out of non-conforming lender back to your everyday lender if the wrong lender is chosen.

Example: 6 month ago CBA refuse to refinance any loan from one of the largest WA non-conforming lender...no matter how strong the deal is and how low the LVR are...Client was force to go to a smaller credit union and "wait" his turn...


Tip: Every Non-conforming lender has a niche market they target....make sure you choose the right lender for the correct niche your in- else the next lender will bundle you up with the "rest" ; part of their customer profiling.

Ie Dont go for a Non-conforming lender that has a niche for client who are have been recently discharged from Bankruptcy ...unless you fall into that category.

Regards
Michel

 

[Mick C]

yes agreed, getting the finance with a default is a good deal. Some want to charge in excess of 10% whereas what i have been able to find at the moment is 8.69%. That's pretty good considering my choices and circumstances.
Im aware that a good story (explanation) for each default may help here but the number of defaults and amounts will not, no matter how good i am at story telling. Even though all defaults are now settled, they remain as defaults paid on my credit report. They do not remove them. I have a couple of years left before they drop off entirely. Simply my fault,and only one to blame.
Im not sure any of the normal lenders would give me a look.

When it comes to non-conforming.... comparing 10% and 8.5% make no sense...the most expensive part of going to a non-conforming lender is not the rate...it's acutely

1. The set up cost- this can range from $900- 2% of your loan amount
2. The risk Fee; if you go over a certain LVR...this can stack up to 3.5% of your loan amount
3. Discharge cost or exit fee....i mean your not planning on paying 8.9% for the next 5 years are you????

Not saying 10% is better then 8.5%....just saying look at the bigger picture.

Regards
Michael

 

[tobe]

Ive had succes with Widebay credit union. They arent a non conforming lender per se, just a little old fashioned. They have a group of investors in Bundeburg or somewhere in queensland that lets them do in house LMI.
They prefer to lend to mum and dads rather than investors, so if this is to purchase an O/O property you might have some luck. Be warned, the amount of documentation they require is onerous.

 

[Property Invest]

Hi Michael,

Even though im soliciting advice/help/feedback, im not comfortable to put up details of my defaults on a public forum. However i would be happy to detail it in an private message.
Now the non-conforming lender in question here is "Homeloans". They do allow me to refinance with a very low exit fee.
Now, that's an interesting issue if a normal lender will not refinance me due to the lender im using. What if, my credit defaults drop off in 1.5 years? would they still not refinance me even though i know present a clean slate?

Thanks in advance.

 

[Mick C]

Home loans Limited is not a non-conforming lender...they are mortgage mangers who repackage the loans from ING, ABL and Advantage....

Mortgage mangers are only good for your small defaults; ie under 3-4 of them as they don't "credit score" ....but they def won't be able to pass your loan with more then 4 defaults...even if they say they can- it's just "bait food for the weak lol" - Don;t worry i been a victim of Mortgage manger's bait in the past ...more then once unfortunately

If your loan is not "too bad" then at times it's fine to go with Mortgage mangers...but from your opening post - you made it sound like your file is totally trashed ahah

Since your going with Homeloans Ltd- im guessing it's done via a broker? because i don't think they have an open channel?


Happy to take your PM/email.

Regards
Michael

 

[Property Invest]

When it comes to non-conforming.... comparing 10% and 8.5% make no sense...the most expensive part of going to a non-conforming lender is not the rate...it's acutely

1. The set up cost- this can range from $900- 2% of your loan amount
2. The risk Fee; if you go over a certain LVR...this can stack up to 3.5% of your loan amount
3. Discharge cost or exit fee....i mean your not planning on paying 8.9% for the next 5 years are you????

Not saying 10% is better then 8.5%....just saying look at the bigger picture.

Regards
Michael

I agree and understand that rate alone is not an indication of a good loan. The whole deal needs to be looked at and see which suits me in what im trying to achieve out of all this.
I will have a 20% deposit available. As 10% has already been paid to the builder (forgot to mention earlier this is for a purchased off the plan PPOR with an unconditional contract)
Exit fee from memory was around $350

 

[Mick C]

Ive had succes with Widebay credit union. They arent a non conforming lender per se, just a little old fashioned. They have a group of investors in Bundeburg or somewhere in queensland that lets them do in house LMI.
They prefer to lend to mum and dads rather than investors, so if this is to purchase an O/O property you might have some luck. Be warned, the amount of documentation they require is onerous.

Yea wide bay are a good bunch. They finally increased their LVR from the stupid 65% (preferred LVR) to 75% now...

 

[tobe]

Since the recent legislation change, exit fees cant be any more than the 'actual cost', so apart from break costs for fixed rates, thats not so much of a consideration anymore. Some lenders might baulk at refinancing a non conforming lender, however if it was presented the right way, I doubt this would be much of an issue.

Homeloans is a mortgage manager, and 'white label' another funders cash to onlend. I cant remeber who they use for their non conforming. Many would think 'rebadging' to be an added cost, and it would be better to go direct, however Homeloans are able to bring ecomoies of scale which means the rate they provide is usually as good or better than the lender direct.

Are you trying to borrow more than 80%? Do you know what the risk fee is?

 

[tobe]

Note, most non conforming loans will not entertain progress payments (widebay being the exception), so unless you are purchasing the property from the builder after completion, you might find you will need to look for another property.

 

[Property Invest]

Michael,

I must have underestimated myself because i thought having more than one default is bad enough. My situation then is not as grim as i must have come across but i do have 3 paid defaults with one of those appearing before the court.
I was actually going to approach Homeloans direct and/or have one of their brokers contact me. I have discussed this with two brokers. One simply gave up on me and said it was too hard for me, yet didnt give me any further advice or ask me a simple thing like "can you raise anymore capital?", and the other broker i haven't heard from in over a week. So, yeh i decided i was going to do this myself.

 

[Property Invest]

Tobe,

There are no progress payments, just a simple final settlement of the 90% remaining.
Ill check on Homeloans risk fee on their website, hopefully i can find it there.

 

[Mick C]

Michael,

I must have underestimated myself because i thought having more than one default is bad enough. My situation then is not as grim as i must have come across but i do have 3 paid defaults with one of those appearing before the court.
I was actually going to approach Homeloans direct and/or have one of their brokers contact me. I have discussed this with two brokers. One simply gave up on me and said it was too hard for me, yet didnt give me any further advice or ask me a simple thing like "can you raise anymore capital?", and the other broker i haven't heard from in over a week. So, yeh i decided i was going to do this myself.

That's a shame ...

Your loan from the outlook is not "bad" as such with only 3 paid defaults.

I notice Tobe ( above poster) is from Vic as well...so if you prefer someone in your own state (maybe face to face?) then consider sending a PM to Tobe

Else i be happy to take on your questions + guild you through the maze with Home loans Via email/phone even if you decide to go with them directly and DIY; no issues there.

Regards
Michael

 

[Property Invest]

I had not realised Tobe was a mortgage broker.

I'm still unsure which way to go. One thing is for sure, i need to settle in a few months.

 

[tobe]

I better change my profile then. Im here as a property investor first and foremost. I find myself lurking in the property finance section mostly cause I find that the most interesting.

 

[Property Invest]

So you are a mortgage broker?
Under your name it simply states "member"

 

[tobe]

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