Alternatives to Traditional Banks for Home Loans

April 18, 2012 by  Filed under: Loans 

After the global downturn forced all businesses to reconsider how they use their money, many banks responded by hoarding their funds instead of lending it to businesses and individuals. Since very few people have enough cash on hand to buy a home, the bank’s hoarding made it even more difficult for the housing industry to recover. If banks have turned you down, then you might want to consider alternative sources that can give you access to loans that can help you purchase a home.

Borrowing from a Credit Union

If you are already a member at a credit union, then you can start applying for a home mortgage immediately. If you aren’t a member, then research the credit unions in your area to decide which ones are right for you. Many of them have restrictions on who gets to join. You might have to live in a certain city or work for a specific company. After you have joined and started developing a relationship, though, a credit union could be an excellent source for funding your home purchase.

Credit unions are owned by the members. This often means that they have more agreeable rates than traditional banks. Even saving a half percentage point can save you thousands of dollars during the life of your loan. Many credit unions are also willing to take more chances on their members. While banks have essentially shut down their lending services to all but their absolute best clients, many credit unions can still make loans happen.

Borrowing from a Mortgage Lenders

You don’t necessarily have to get funding from a bank or a credit union. There are numerous companies that focus on lending money to businesses and individuals with strong credit ratings. For them, each loan is a business investment that earns them money over time.

While this gives you more options, most of these companies are quite conservative. They will probably want a lot of information before they will even think about giving you a home loan. Be prepared to prove to them that you have a reliable source of income, that you have paid your rent on time for the past several years, and that you have paid your expenses on time. These companies can essentially ask for any information that will help them decide whether you are a good or bad risk. It’s a lengthy, intrusive process, but it gives you another option to consider.

Just because a bank has said you do not qualify for a loan, you don’t have to give up your search. Consider the other funding sources in your community. You can even research online opportunities that will put you in contact with lenders outside of your immediate area. The more options you have, the better chances you have.

Use our home loan comparison software to find out how much you can save by getting the best home loan rate on your Australian home loan.

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