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Whether you are a mortgage broker, mobile lender or bank branch manager, many clients come through your doors every day looking for assistance with a variety of lending scenarios.
Most of them you can assist, but what happens to the clients you cannot help? For those purchasing a home, most have to save a bigger deposit or wait until they have been in their job a little longer, but what about those looking to refinance that may be in financial distress?
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The main client type that comes to mind is someone looking to consolidate their myriad of personal debts, whether secured or unsecured. Consumers can get into some tricky situations with their debts, such as being in arrears, late payments, creditors chasing them and credit defaults. From a lending point of view, they may not meet the income, LVR, credit scoring or employment criteria, and you just cannot get a deal through.
When this happens (most likely more often than you think it does), do you just advise them that you cannot assist and send them on their way, or do you look for options outside of your main role of lending? Many options other than lending exist, ranging from budgeting and financial counselling to creditor negotiations and debt agreements. Consumers have been led to believe that to pay out a debt, they can automatically move their personal debts onto their home loan to solve the problem. Sometimes credit is not always the most appropriate option.
What many people need is not more credit, but relief from credit due to not being able to afford what they already have. In my role at Fast Debt Help, the amount of clients I see each day that owe as much on credit cards as others do on their mortgage is staggering. They definitely do not need or could even afford to qualify for a mortgage – they need someone to hold their hand, to remove the harassing creditor calls and give them some relief from their financial pressures.
At the end of the day, we all go to work to earn a crust, but before you do that next refinance/consolidation loan for someone who has been in financial distress, ask yourself: can this client really afford to repay it without hardship? The servicing calculator may say yes, but can they really?
Peter Ellis, financial wellbeing specialist, Fast Debt Help
Peter Ellis is a financial wellbeing specialist from Melbourne, Victoria. Experienced in helping individuals and companies deal with unmanageable debt, Peter and his team work hard to ease the pressures that being in debt brings. Peter also works with like-minded companies from around Australia introducing solutions, education and advice on all things related to managing debt.
