These were previously known as Non–Conforming loans. Here, the applicants are usually regarded as high risk due to their inconsistent income streams or they may have a poor credit history and /or facing personal setbacks, such as small business failure in the past, divorce or a relationship breakdown.
Essentially, this means that they automatically become classified as a high-risk or non-conforming borrower.
Specialist Lending is no different to traditional lending through the major banks. It’s all about ascertaining what has happened in the borrower’s circumstances and more importantly, gauging whether the borrower is now in a better financial position.
Some specialist lenders’ products are no different to the products offered by major banks in that they also offer offset accounts, choice of repayment frequency and type, as well as free access to re-draw facilities. The lending principles are also similar to traditional banks, meaning, it boils down to serviceability, security and suitability of the loan product.
Generally, their interest rates are also competitive. However, each applicant’s interest rate is appraised against the risk profile of the individual, and the overall loan to security ratio.
Paul is assisting more and more clients in the Specialist Lending area because of the economic climate, and the fact that most current borrowers have limited access to this type of lending through their current banks.
Tags: specialist home loans