What is a near prime home loan?
If you’ve approached a main bank for a mortgage and they’ve rejected your application, a near-prime home loan might be right for you. Here’s what you need to know.
WHAT IS A NEAR PRIME HOME LOAN AND WHY SHOULD YOU GET ONE?
A near prime home loan is a mortgage designed for borrowers who don’t quite meet the requirements of the big banks. It’s an alternative that often has many of the same benefits of a ‘regular’ home loan.
You may suit a near prime loan if you have:
- Multiple sources of income (such as a second job or investment income)
- Self-employed income
- Reliance on bonuses, overtime or other fluctuating income
- A couple of issues on your credit score
- A unique borrowing situation
For example, a person whose income relies on bonuses or overtime may struggle to get a prime loan, but a near-prime loan may be possible. The same goes for the newly self-employed, those with a blip or two on their credit score, or those in a unique lending situation, such as buying a home with more than two people.
These are just a few examples. Broadly, if someone has trouble getting a bank loan, near-prime might be a better fit.
ARE NEAR PRIME HOME LOANS MORE EXPENSIVE?
No, near prime home loans aren’t always more expensive than the equivalent prime lending option. At the time of writing, our lowest near prime floating rate is lower than some main bank prime floating rates.
This may vary over time, but broadly speaking, near prime isn’t always more expensive than prime.
WHO PROVIDES NEAR PRIME LOANS?
Near prime loans are relatively common in Australia, but they are a more recent initiative in New Zealand. However, there are a couple of lenders that provide them - Avanti Finance included.
If you’ve had trouble getting a home loan from a bank, a near prime home loan might be an alternative.
Find out more about a home loan option through Avanti Finance.