With lender advertising so focused on interest rates, and with everyone tripping over themselves to see who can go the lowest, the other side of lending is often forgotten or frowned upon.
Specialist lending is a legitimate and growing form of finance. Not everyone can have a 'perfectly clean' credit record, nor can everyone show income via payslips or completed tax returns. We all know someone who has gone through a life event where their financial and credit circumstances haven't come out the best.
Here are four myths that may arise when someone talks about specialist lending:
Bad credit means no lending options
Mainstream lenders like to advertise that anyone can get a loan – so when people apply and are declined, it seems like there are no options left. In fact, there are many reputable lenders that regularly assist clients who have been declined. This includes people with credit defaults, limited employment time or late payments on other debts.
Self-employed clients must have completed tax returns
Options exist for businesses that are operating well but don't have financials. Sometimes self-employed clients can't show tax returns because they are too busy, not good at doing paperwork or have no bookkeeper to help them. Business bank statements, BAS and accountant declarations are all forms of acceptable income for specialist lenders.
Interest rates are extremely high
Naturally, specialist lenders will charge more than mainstream lenders, but you must take into account that specialist lending is centred around a solution to a current problem. Once that problem is solved, clients can often refinance to a mainstream lender. Clients can save many thousands of dollars per month by consolidating their debts and getting their finances back in order.
There is no flexibility with loans
Most specialist lenders offer redraw, internet and phone banking, extra repayments, excellent support for borrowers who have questions and loan portability if they want to move properties during the loan period.
Specialist lending is a necessary part of the lending landscape and is continuing to grow. Specialist loans can help clients save money and often keep their family home. If brokers can show clients they will have a clear benefit from specialist finance, and if they have completed all the necessary checks, there is no reason why specialist lending shouldn't be considered.
Peter Ellis is a financial wellbeing specialist from Melbourne, Victoria. Experienced in helping individuals and companies deal with unmanageable debt, Peter and his team work hard to ease the pressures that being in debt brings. Peter also works with like-minded companies from around Australia introducing solutions, education and advice on all things related to managing debt.