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Award-winning broker Hank ‘The Bank’ Hong explains why more than a third of his clients require specialist solutions.
How long have you been offering specialist lending to your clients?
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About five years now.
Why choose to offer specialist lending instead of just sticking to the more standard loans?
Specialist lending is very important because not everyone fits into the standard pool of boxes, and specialist lending catches everything outside of it. You need it because it covers off everything else.
How difficult is it for a broker to master specialist lending?
It’s not very hard at all. The way to market specialist lending to a client is to explain to them that their current situation doesn’t fit into the normal lending criteria so basically telling them that unfortunately if they go to any bank they will be declined based on this.
A specialist loan is only a little bit more expensive, but it gets your deal done. It gets you a home.
A lot of the time when people seek specialist lending, they’re only going to be in that situation for maybe two or three years. It’s not the final place of we’re they’re going to be.
Specialist lending is there to look after you during that time until your personal situation, like a default or bankruptcy, boils off. Then you can go back to normal lending.
Is a specialist loan only ever considered a short-term solution?
Yeah, 99 per cent of the time specialist lending is only a short-term band-aid effect. It’s usually for a couple of years, if that.
What percentage of your total loan book is made up of specialist lending?
I’d say about 35 per cent.
What are some of the advantages of dealing with a client who requires a specialist solution?
The really good thing about dealing with a client that needs specialist lending is that they’re not [the type of] client who is rate sensitive [as] they don’t have too many options. Of course we will find the client the best rate possible, but they have maybe three or four options right over the whole market, so for a broker it’s really quite easy.
Specialist loans are commonly associated with people who have a bad credit history. Are there other reasons why a client might require a specialist loan?
Specialist lending isn’t just based on the credit report – that’s only one factor. The other factor is income.
Specialist lenders deal with a lot of self-employed people. They will look at the six-month pay statement or they’ll use an accountant’s letter or BAS statement. They are really good for the self-employed.
They’re also good for certain income types as well, so if your income isn’t standard they will consider that.
From a broker’s point of view, is specialist lending just as competitive as standard lending?
I think it would be because once a broker finds out how easy it is to do specialist lending, especially when you’re dealing with Liberty or Pepper, it’s a really simple process. They do a lot of the hard work for you.
A specialist deal is like doing a normal deal, but explaining why it has to be special. It’s just an extra paragraph or an extra document.
The lenders are really there to help you get the loan approved.
