Traditional lenders in the home loan market are led by a set of guidelines that informs them about their client’s history. Based on this data, they are able to proceed with various avenues of investment on their behalf. Yet problems arise when that record has experienced setbacks.
Here is where a bad credit mortgage broker steps into the breach. As the industry introduced standards to protect borrowers from engaging in nefarious or unethical practices, it has become more difficult for brokers in this field to help out an individual who does not have a 100% clean bill of financial health throughout their expenditure and application processes.
Fortunately these professionals who operate as a niche bad credit mortgage broker can guide a client to take steps that regular brokers would naturally avoid or pass off to another party.
Here is a few key points where they can provide significant value should you require a broker in this department.
Eliminates Payday Lender Option
The rise of payday lender brands can be a positive for those that require an up-front cash injection to cover a loan repayment, yet the consensus is that this often starts a negative spiral of debt that is almost impossible to control.
A bad credit mortgage broker is tasked with the ability to refinance a client who could be charged upwards of 20-25% interest on a payday lender loan, seeing them fail to recover their position and forced to file for bankruptcy. This operator will work discreetly, however there is a strong need for transparency as black marks will require an explanation to continue onto the next phase.
Advises The Right Type of Loan
A bad credit mortgage broker can be utilised for all manner of purposes for those that have a black marks on their financial records, the most common of which lie with loan applications. These come in a variety of types as the broker will have the knowledge and expertise to guide their client through the intricacies of each process:
- Home loan
- Private mortgage
- Prime loan
- Commercial loan
- Self-managed super fund (SMSF) loan
- Low Doc loan
Lowering Risk and Interest Rate
Banks and creditors will use something known as a Loan To Value Ratio (LVR) which works to assess the amount being borrowed by a party against the value of the property that is being used as leverage. For a bad credit mortgage broker who is skilled in managing these matters on a daily basis, they should have the capacity to minimise the risk and lower the interest rate for the loan applicant if given enough detail to use to their advantage.
A bad credit mortgage broker can bring employment history into the reckoning as well as elements like an individual’s insurance record.
Adept At Alternative Methods
A bad credit mortgage broker will understand that a credit report will only have a lifespan of 5 years with a bankruptcy record standing for 7. What these professionals can organise is ways and means of tackling external challenges that will help to accelerate the process, such as settling unpaid defaults from small to large, and applying for a court writ or judgment that will give their client a greater capacity to borrow in the short-term.
Just because an individual has black marks on their record, it does not make them automatically ineligible to apply for a loan that suits them. A qualified bad credit mortgage broker is a tremendous asset to avoiding fees, penalties and red tape that would otherwise prevent a citizen with poor credit history from progressing with an application.
Each and every bad credit mortgage broker is not a miracle worker and they can only deal with their client within the confines of the law. However, the more detail and transparency they offer the professional, the more options they have at their disposal to solve the issues.