Historically, non-standard or non-conforming loans were thought to be avoided at all costs.  They had the stigma of being ‘dodgy’ or manipulating the truth to get a loan. This is absolutely not the case and in many ways, is the opposite.

Personal circumstances often dictate that not everyone can have a ‘perfectly clean’ credit record, nor can everyone show income via payslips or completed tax returns. Life events like illness, accidents, deaths or divorces, as well as immaturity or downright stupidity could all be catalysts to blemish peoples’ credit history.

Master Builders’ Financial Services Director, Harry Pontikis, has shared some his top 5 facts when it comes to non-standard loans to help correct the myths.

1.    Bad credit still means there are lending options

Mainstream lenders advertise that anyone can get a loan to ensure they get as many applications as possible – so they can choose the lowest risk or best ones.  Consequently, when people apply and are declined they feel that there are no other options. This is not true, as there are many reputable banks and other lenders that focus on non-standard clients who may have been declined by banks. This includes people with credit defaults, limited employment time, late payments on debts or for non-standard loan purposes like developments or funding their business.

2.    Self-employed clients do not need completed tax returns

Options exist for businesses that 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.

3.    Interest rates are not much higher than standard loans

Naturally, specialist lenders will charge more than mainstream lenders, to take into consideration the nature and number of credit blemishes or previous mistakes from the borrower. In today’s environment, even the most credit impaired borrowers can obtain finance and can refinance to cheaper, mainstream lenders after displaying good conduct on their new loans. Sometimes consolidating multiple debts into a non-standard home loan would still save borrowers thousands of dollars.

4.    Non-Conforming loans still have flexibility

Most specialist loans offer redraw, internet and phone banking, extra repayments or any of the standard loan features found with mainstream home loan products.  In fact, non-conforming lenders try to make these loans as user-friendly as possible to try to entice their clients to stay in their loans as long as possible. If you are using the services of a Credit Advisor, they will leave you in these loans only as long as required, they should be looking to refinance you into mainstream lenders ASAP to ensure you are capitalising on the very low interest rates currently enjoyed in Australia.

5.    Affordability and benefit

Being eligible for a non-standard loan still means that you must be able to afford the loan and that it achieves your objectives, as well as putting you in a better position than before you had the loan. Your Credit Advisor will provide you with a written document to demonstrate whether you can afford it and how it improves your financial position, as well as achieving your stated objectives.

Having access to a an expert Credit Advisory Organisation, like Master Builders Financial Services, often may mean the difference between keeping the family home, making a profit on a project or keeping your business running.  There is a significant demand for this type of lending and many people – especially the self employed are benefiting from the flexibility offered by specialist lenders.

If you have queries regarding your finances or need help with a loan, contact Master Builders on (03) 9411 4555. You can reach Harry directly on 0411 258 058 or email [email protected].

Harry Pontikis (Australian Credit License #387277) is Director of Chocolate Money trading as Master Builders Financial Services.

Disclaimer: This is not specific advice as your situation has not been taken into consideration.