Jason was 28 when he decided to start looking for his first home. A builder by trade – he had been working for the same employer for over 8 years and he had substantial savings – enough to pay a 10% deposit and cover stamp duties.

He usually paid the phone bills on time, and his credit card was barely ever used.

In spite of all this, Jason was unable to get a loan through traditional lenders. The reason – a mistake from the past.

Against the advice of his parents, he decided to help a previous girlfriend get car finance. She was only working a couple of days a week on a casual basis, and the finance company wouldn’t approve her loan.

Always the nice guy, Jason offered to put the car in his own name – and trusted his girlfriend to keep the repayments on track.

When the relationship broke down a couple of years later, he was shocked to learn that no repayments had been made on the car for several months. To make matters worse, the news came from a grumpy middle-aged man who arrived early one morning trying to repossess the car.

A few years on, Jason was growing increasingly frustrated in his search for a home loan. Finally, he found a Mortgage Broker who suggested a ‘Non-conforming’ loan. Although the interest rate wasn’t brilliant, Jason was finally able to get his foot in the door. The lender also offered to review the loan conditions after 12 months, if all of the repayments were made on schedule.

With the help of a non-conforming loan, Jason was able to realise his dream of home ownership, despite having a bad credit record.

Non-conforming loans are designed for people who don’t conform to the traditional criteria used by lenders to assess a loan. Some borrowers have a bad credit history, and others might be struggling to get approved because they just changed jobs. Sometimes, even people who have previously been declared bankrupt can still be approved for a non-conforming loan.

Importantly, there is a big difference between ‘Non-Conforming Loans’ and ‘Low-doc Loans’. While non-conforming loans are designed for people who have an imperfect credit history, low-doc loans are designed for the self-employed. Low-doc loans are often quite strict – borrowers usually need to have a 20% deposit, and a very healthy credit history to get approved.

Lenders usually charge a much higher interest rate for non-conforming loans. The good news is, many lenders will agree to review your rate after a set amount of time, providing that you meet all of your repayments.

Whilst it’s never a good idea to take out a home loan if you can’t afford to repay it, non-conforming loans can be very helpful when your financial position is good now – but your past credit mistakes continue to haunt you.