Specialty loans can help borrowers who have unique circumstances.
The home loan market in Australia can appear fairly homogenous. While products can vary significantly in the interest rates and features they offer, standard home loans tend to appear fairly similar.
However, not all borrowers are alike. Each borrower comes to the home loan process with their own unique history and set of circumstances. Specialty home loan products recognise this, and offer help to borrowers with a variety of needs.
Bad credit loans
Banks weigh up your entire financial history when deciding whether or not to lend money to you. They look at your credit file and credit score to determine whether or not you’re a good credit risk. Most mainstream lenders have fairly stringent criteria when it comes to the borrowers they’ll accept, but some lenders specialise in borrowers who sit outside these criteria.
Bad credit loans allow you to secure finance even if you’ve had some negative marks on your credit history. Lenders who deal in these loans typically take a more hands-on approach to assessing your credit file, and take into account the circumstances that led to poor credit history. However, be aware that these loans often carry higher interest rates.
Standard home loans tend to require a very specific set of documents. Borrowers have to provide payslips to prove their income. However, for self-employed borrowers, this is no easy feat. Many borrowers don’t receive PAYG income, and don’t have access to the standard documents used to prove their earnings. Low-doc loans exist to help these borrowers.
Low-doc can be a bit of a misnomer, as the documentation requirements for these loans are no lower than for standard loans. The difference lies in the types of documents accepted. Borrowers are able to provide accountants letters, Business Activity Statements (BAS), income declaration forms or other types of documentation to show their earnings.
Self-managed super fund loans
Self-managed superannuation funds (SMSFs) allow investors to take control of their retirement savings and invest them as they see fit. One of the asset classes open to SMSFs is property.
Many lenders offer home loans specifically for SMSF property investment. These loans are structured like normal home loans, though the structuring of the actual SMSF for property investment can be fairly complicated.
For Australians headed into retirement, the family home can often be their most valuable asset. If retiring Australians want to provide themselves income but aren’t ready to sell their home, a reverse mortgage can offer a solution.
Reverse mortgages lend money based on the equity in the borrower’s home. Unlike traditional mortgages, reverse mortgages don’t have to be repaid on a regular basis. They are typically repaid when the borrower either sells the home or moves into an aged care facility.
Getting expert help
Many specialty lending solutions can be more complex than traditional home loans. The products can carry higher interest rates than mainstream mortgages, and a limited number of lenders offer these products. Seeking expert advice can help you navigate specialty finance solutions. You may benefit from contacting a mortgage broker.
Short-term finance can refer to a variety of different loan structures, but they all share one feature in common: they provide a home loan solution to bridge the gap between more traditional home finance options.
Short-term loans could come in the form of second mortgages, bridging loans or caveat loans. They are repaid quickly, with some lasting as short as 60 days and others running as long as a year. Short-term lenders provide fast approval and quick access to funds when time is of the essence.