SPECIAL FEATURE: Seconds needs unusual products

Mortgage Introducer

August 5, 2015

The appearance of countless fixed rate products flooding the market has started a competitive ‘rate war’ between lenders. Many now boast loans with an APR of as little as 3.5% a year, the lowest rates the industry has ever seen. With so many companies contending, innovation is likely to be the key to future success. So who will be the next lender to introduce an innovative product to the market instead of competing on rates?

Low wages, tight family budgets, debt repayments and bills cause many people to struggle with debt. However, on top of the normal day-to-day budgeting, many unforeseen and life-changing events, such being made redundant, divorce or death of a spouse can also throw finances into disorder.

Although it is advised that consumers should have a backup account worth a few months of salary in case of an unexpected circumstance, many people with debts are unlikely to have any savings — and, if they do, it is often spent clearing previous debts.

However, borrowers with unsecured debt could benefit from ‘outside-the-box’ loan products, which could offer a helping hand if a life-changing event means they can no longer keep up with loan repayments. Victims of circumstance lending would be able to rebuild their finances and protect their credit rating score with affordable loans especially tailored to their individual situations.

These new products would allow more consumer and lender communication and ultimately lead to more consumer confidence. The products would allow individuals who have been affected by a poor credit rating or low credit score due to bankruptcy, redundancy or other financial problems, find a loan which helps rebuild their life and financial worries, which they would otherwise not have been granted. Some lenders are already beginning to test the market with such products, but it remains to be seen how they will be perceived.

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