Non-conforming loans
Non-conforming loans are loans that do not meet the banking criteria for lending money, such as going over the loan limit, lack of collateral or documentation, poor credit, or an unusual loan purpose. These deviations generally make the loan riskier, which is made up for by a higher interest rate and higher overall costs. They may also require mortgage insurance to ensure full payment, typically shouldered by the borrower. Non-conforming loans also tend to be less flexible than conforming loans; for example, a lender may not allow early repayments or redraw facilities.