Q: How long have you been offering specialist lending?
About five years now.
Q: Why do you like specialist lending?
One of the reasons I go to specialist lending is that the credit assessors always find a way to approve a deal. They use old-school thinking – basic common sense – which is now lost in the whole credit scoring system.
Specialist lenders are really quick as well – they will come back to you in 24 hours. They can make strong calls, and when you get approved, they will back up their words. It’s a different ball game.
Q: What percentage of your total loan book is specialist lending?
I’d say about 35 per cent.
Q: How difficult is it for a broker to master specialist lending?
It’s not hard at all, and it’s done the same way as you would write normal home loans. The way to market specialist lending to a client is to explain to them that their current situation doesn’t fit into normal lending criteria – basically telling them that if they go to a bank, they will unfortunately be declined based on this.
Q: Is a specialist loan only ever considered a short-term solution?
Yes, 99 per cent of the time specialist lending is a short-term solution. It’s a Band-Aid approach – usually for a couple of years, if that.
Specialist lending is there to look after borrowers during that time until their personal situation, like a default or bankruptcy, boils off. Then they can go back to normal lending.
Q: How do you identify a client in need of a specialist loan?
The first and easiest way is by their credit report. If a client has a default, liquidation, bankruptcy, court requisition – anything that’s credit report-related – it can automatically go to a specialist lender and they’ll take on that deal with no issues.
Special lending isn’t just based on the credit report though – that’s just one factor. The other factor is income. Specialist loans suit a lot of self-employed people, and they’re good for certain income types as well. If your income isn’t standard, they will consider that. Anything that doesn’t fit in the box, I always take the chance and send it over to a non-conformer. And if you tell them that “yes, my client does make money, my client is going to do well” and you back up your story well, they will support you.
Q: Do you see more brokers moving into specialist lending in the future?
Yes, I definitely do. Australia is becoming a debt-orientated country – a lot of people are getting into more debt, getting more into credit cards, getting into car loans, and suffering at a younger age from having those kinds of blemishes. The new generation of brokers coming through are quite flexible with all sorts of customers. I chat to heaps of guys who are about my age who are the top brokers in the industry, and they all do specialist lending.
Hank ‘The Bank’ Hong, Home Loan Experts, Rhodes, NSW