If you needed to borrow money many years ago, you would go to the local bank where you had an account. You would fill out the loan application and hope that it would be approved. If it was declined because of your credit history, you did not have many other options.

The amount of lenders that you can turn to if you want to borrow money has grown. You are still at risk for being turned down if your credit history is not as good as the lenders want.

While the application process has not changed much other than having more places to try, the options you have if you are denied has improved. There are now many ways that you can get the credit you need despite having bad credit.

Dealing with Non Conforming Lenders

Non Conforming Lenders often specialize in dealing with people who have bad credit. They offer the loans that people need, but they do take some steps to minimize the risk of lending money to people who have not been wise with their credit in the past. There are some things that you should do if you are considering using a non conforming lender for bad credit to make the process easier.

Be prepared. The best thing that you can do is to learn how to check my credit score before you apply for credit. You are entitled to view your credit report once a year at no charge from the three credit reporting agencies. You can also find services that will allow you to view your credit more often. Familiarize yourself with how the credit report works and what the information on the credit report means.

Correct any mistakes. Thee credit reporting agencies are not perfect. Mistakes are actually common on credit reports. If you see any inaccurate information on your credit report, dispute it and have it removed. Your bad credit will not look so bad if you do this.

Take steps to improve your score. There are some things you can do to improve you credit score quickly. Paying down debt and closing extra accounts may help you raise your score and it can happen faster than you may think.

What to expect when working with Non Conforming Lenders

When you work with non conforming lenders for bad credit you need to know the rules that they will be following. They are going to charge you a higher interest rate for your loan. That is normal and is something that you need to expect. They may also require a risk fee to be paid and generally higher application fees.

Beware of scams with private lenders

Scam artists love to take advantage of people with bad credit. They figure that these people are more desperate and are easier to take advantage of. Before you work with private mortgage lenders take some time to check them out. It is also a good idea to look at forms of credit protection that may keep you from becoming a victim of fraud. There will be some people that say this is common sense, but if you are desperate to borrow money, you may not be as careful as you should.

If a private lender does not disclose all of the terms and fees of a loan without asking and if they are evasive about any questions that you have, turn to another lender. There are plenty of non conforming lenders out there. You will be able to find one that you can trust.

With the advent of COVID many Australians have been struggling with debt. Debt comes in many forms, there are previous loan installments, bills, payments and obligations that have piled up and end up becoming debt. One of the best ways to get out of the vicious cycle of debt can be by taking a debt consolidation loan. If you‘re considering a debt consolidation loan as a path forward, here are our expert tips for debt consolidation, done right.

Debt management tips – Prior to searching for a debt consolidation loan

1.Begin by creating a list of your debts

The first step of debt management before searching for a debt consolidation credit product is to know how much you owe, how much you’re paying on your credit and the total that will be repaid at the end of the term.

Reduce your outgoings by switching providers for insurance, utilities and service providers
A further step for redressing the balance of your debt management prior to debt consolidation is to reduce your outgoings is to review your insurance, utilities and service providers.

Reduce the amount you owe through selling assets
If you own valuable assets that you don’t need, it may make sense to sell them to reduce the amount of new credit you require to repay your existing debt.

Create an income and expenditure sheet
The next step for creating a thorough debt management plan is to understand how much you can reasonably afford to repay each month after you’ve reduced your debt through selling assets and cutting out unnecessary expenses.

Find out whether you can reclaim your bank charges
If you’re facing genuine financial hardship you may be eligible for a refund of your bank fees. You should start by writing a letter or email to your bank, being sure to keep a copy yourself. If your request is refused, you may want to make a complaint to the Financial Ombudsman.

Access your credit history to check your credit score
The health of your credit score will directly affect what credit products are available to you for debt consolidation. So as a final debt management step, you should download a credit report before applying for so much as a single debt consolidation loan.

Research the market and look for low-interest debt consolidation products
Always use a comparison website to research potential debt consolidation loans. This will provide you with a full view of the market, although your credit record may restrict your options if you require a debt consolidation loan with bad credit. Repaying a singular loan will also make your debt management far simpler.

It’s important that you understand that numerous credit applications can put a dent in your credit history. Ultimately this may stop you from obtaining a debt consolidation loan at all.

If you’re a homeowner, consider whether an equity release loan could be a possible debt consolidation solution
Equity release debt consolidation loans offer some of the most competitive interest rates available. If your home has increased in value significantly since you purchased it, an equity release loan may be a viable debt management solution, although you should still research other debt consolidation loans to compare interest rates.

Carefully consider whether replacing unsecured lending with secured lending would put you at risk
A further consideration to the debt management tip above is whether you will be responsible with your debt management in the future. If you’re facing serious financial troubles, it may not be a wise move to secure a large amount of debt consolidation against your home.

If part of your debts includes a car loan, tread carefully
If your vehicle is on hire purchase don’t immediately think that consolidating this debt is the best solution. If you’ve owned your vehicle (and kept up with its repayments) for more than half of its term, you may be able to simply hand the vehicle back to the finance company. This can free you from any negative equity, and you may be able to use a cheaper alternative (such as leasing).

Contact your creditors and ask whether they can offer you a lower interest rate
Before deciding that debt consolidation is right for your needs, you should talk with those you owe money to, to see whether they could switch your product onto a lower interest rate. Just bear in mind that if they do run a credit application, this will register on your credit report. As this can affect your ability to get more credit, this tip won’t be suitable if you have a large number of creditors.

Speak with your bank about debt consolidation if you owe money over numerous products
If you hold numerous products with one provider – for example, a credit card, loan and overdrafts with your bank – you should speak with that provider about what your options are. In the case we’ve just mentioned, a personal loan will almost always offer a better interest rate than those offered by your bank account and credit card.

Always understand how much any extra fees and charges will amount to before taking out a debt consolidation loan
Along with your list of debts, you’ll also need to understand how much you’re paying month by month in interest and any extra fees (such as bank charges for going overdrawn, or charges for missed repayments).

Consider whether it may make sense to improve your credit score prior to applying for debt consolidation
If you find that you have a poor credit score, you may want to take a few months before applying for debt consolidation to focus on improving it. The tools we’ve mentioned above will all provide helpful suggestions for working on your credit score.

Before agreeing to debt consolidation, research alternative debt solutions
Debt consolidation may not be right for your circumstances, particularly if you have poor credit and are unable to apply for a new loan.

Until you’ve secured a debt consolidation loan, make sure you meet your repayment obligations
If you default on your credit products you greatly reduce the chance of being approved for any loan.

Always seek professional credit expert advice before signing for new credit
Nothing can replace the value of expert credit advice, so this tip is simple – always ensure you speak with a trusted advisor before signing on the dotted line for debt consolidation.

Decide on a plan for changing your spending habits in the future
Here’s a tough, but important, question to answer: are you spending more than your earning? If this applies to you, you’ll need to cut your outgoings if your debt management plan is going to work long after your debt consolidation.

So gain a good understanding of how much you’re spending on non-essentials and aim to cut them out or reduce them.

Remove or reduce your overdrafts after your debt consolidation
Overdrafts are an easy way to fall back into the trap of debt. If you’re including your overdrafts in your debt consolidation, make sure you either remove them completely, or reduce them to a reasonable level.

Cut up your credit cards
If you feel unable to control your use of your credit cards after your debt consolidation, cut them up or consider closing them altogether.

Speak to the National Debt Helpline

If you can not find a Solution in the above tips you can call the National Debt Helpline on 1800 007 007. Their professional financial counsellors provide free and confidential advice. The helpline is open from 9:30 am to 4:30 pm, Monday to Friday.

You can also visit the National Debt Helpline website. It has step-by-step guides explaining how to fix common debt problems.

Since the Covid Pandemic an increasing number of people are choosing flexible working opportunities to successfully combine both their lifestyle and their income commitments.

However, many home loan applicants have found that their bank is apprehensive towards them and it is because of their irregular working hours. They don’t seem to fit into the strict lending guidelines set out by banks and they are not seen by banks as holding down a stable employment with regular income.

A Non Conforming Lender will be familiar with the lending guidelines and credit policy requirements of a number of non bank lenders/credit providers who will accept Unusual Employment and Income with a Near Prime Loan.

What are the Common Unusual Employment and Income Types?

Below are some of the common unusual employment and income types:

PAYG (pay-as- you- go) contractors

Casual workers or Second Job

Part-time workers or on Probation

Self-employed individuals

Sub-contractors

People with other forms of income

Type 1 – PAYG Contractors

PAYG contractors are employed via an agency or directly via their employer. This form of employment is now common in a variety of fields such as:

Medical

Teaching

Engineering

IT (Information Technology)

Mining

Project Management

Construction

Government

If you are a PAYG contractor and you are looking for a home loan here is a list of things that lenders/credit providers will require you to provide:

You will be required to provide a copy of your most recent “Employment Contract”, with income details listed and you will need to provide evidence that you have had employment in the same industry and that you have a good track record in your chosen industry.

You will need to provide evidence that your employer or employment agency takes care of your income tax and superannuation contributions for you and show copies of latest pay slips.

Note: If you are not on the direct payroll of an employer or employment agency, you may be treated as being self-employed.

Type 2 – Casual Workers or Second Job

This type of employment applies to people working on a casual basis in the following industries:

Restaurants

Retail

Teaching and Tutoring

Nursing

Childcare

Trades

Drivers

Cleaners

If you are a casual employee, you will generally need to provide evidence that you have been employed at the same place or industry.

Type 3 – Part-Time Employees or on Probation

If you are employed on a part-time basis or on Probation you will find that non bank lenders/credit providers will generally require you to:

Provide evidence that you have been employed at your current employment for at least 6 months

Provide copies of a computerised pay-slip covering a minimum of two (2) pay cycles in order to confirm details of your base income and a signed letter of employment from your employer listing details of your current base-remuneration.

Type 4 – Self-Employed Individuals

You are categorised as self-employed individual when you are paid through your ABN even when you are conducting freelance work as a journalist, photographer, tour guide, etc. In such a situation, you will find that most Banks will require you to provide evidence that you have a regular income to sustain a loan. This includes providing evidence that you are a business owner or partner and you have been trading in your current business for at least 24 months.

For a Prime Bank Loan you will be required to provide copies of your most recent Personal and Business Income Tax Returns and business financial statements, reflecting two (2) years trading activity.

For a Non Prime Bank Loan you have a Low Doc Home Loan option for Self Employed Australians where you can supply a declaration of income with either:

Accountants Declaration of income

6 months of lodged BAS statements

6 months of Business Bank statements

Note: If you conduct freelance work with an employer, you may find that lenders/credit providers may require you to provide a copy of the written agreement between you and the employer that outlines your pay and conditions.

Type 5 – Sub-Contractors

Sub-contractors have specialized skills and they are generally employed by a primary contractor to provide specialized services in a variety of fields such as:

Building and Construction

Mining

Civil Engineering

IT (Information Technology).

Note: Many sub-contractors have little to no overheads and no staff and most are typically self-employed. In a sense they are similar to PAYG contractors.

Type 6 – Other Forms of Income

If you receive other forms of income and you are unsure if it is acceptable you should seek help from a Specialist Mortgage Broker. These other forms of income can include:

Centrelink payments and Pensions

Commissions and Bonuses income

Trust Distributions income

Car /Shift and other Allowances

Annuity Income from Superannuation

Director’s fees

Second Job income

Investment income (i.e. Dividends received from publicly listed companies)

Child Support Court Ordered Maintenance payments

Salary Sacrifice

Foster Care Income

Superannuation Income (Pension or Annuities)

Trust Distributions

Oversease Income

Maternity Leave

Seek Expert and Professional Advice

If you still have doubts regarding your employment status and want to obtain a Home Loan you can seek help of an experienced mortgage broker or Non Conforming Lender because they will have experience of dealing with many non bank lenders/credit providers on a regular daily basis.

A Debt Consolidation Home Loan can Help you take Control of your Finances

Are your debts getting out of hand and you want to take control of your finances? If you have answered yes, you should consider the possibility of refinancing your current home loan and combining your multiple debts with a debt consolidation home loan (e.g. credit cards and other personal loans) into one home loan.

How does the process of Refinancing My Home Loan to Consolidate My Debts work?

You simply consider applying for a new loan on your current property and you use this new loan to pay out your current home loan and any other debt you may have (e.g. higher interest credit cards or personal loans)

How Can I Benefit by Refinancing My Current Home Loan and Consolidating My Debts?

You too can benefit in the same way that many Australians are already benefiting by refinancing your current home loan. This will enable you to:

Lower your monthly repayments

Make only one repayment

Lower your interest rate

Reduce the amount of time it takes to pay off your home loan

Get yourself back in control of your debts much sooner than you anticipated

You will not have to experience the stress and pain of overdrawn or over the limit credit card balances

Reduce your debts (including eliminating high interest credit card debt and personal loans)

You will not have to pay the higher credit card interest rates anymore

Who can enjoy the Benefits of Refinancing?

Refinancing may benefit you even if you fit into one or more of the following categories:

Irregular income

Short-term employed or not employed long enough

Self-employed

Previously bankrupt or Part 9

Declined by another lender

Bad credit history

Existing loan arrears or defaults

What Should I Consider When I Am Applying for a Refinance Home Loan?

Make sure, the refinancing and debt consolidation process is beneficial to you. I suggest you to consider the following outcomes at the time of applying for a refinance home loan and confirm in your own mind, if the outcomes are to your benefit:

You are kept fully informed

Your repayments will be reduced – not increased

There are no hidden fees or costs

You have achieved control over all your debts

There is a real long term benefit to you

Not all lenders allow equity release to consolidate debts contact a Debt Management Mortgage Lender

So, don’t spend your money in making high monthly repayments. Take full control of your finances and contact a debt consolidation specialist who will provide you with expert advice on refinancing your current home loan to consolidate your debts.