In order to protect themselves from bad debts and breaking the Reserve Bank restrictions, Banks are embracing strict credit policies. With the latest Loan to Value restrictions in effect, they now demand a minimum 20% deposit (in the main) before approving applications for properties located in the Auckland council area. (outside of Auckland 15% is the new minimum). People who haven’t saved enough to make this down payment either have to wait a few years until they gather the funds or they can approach non-Banking institutions to get a home loan.
Unlike mainstream Banks, non-Bank lenders take greater risks by offering you low deposit home loans, bad credit home loans and second mortgages. Banks have also imposed lending restrictions on investment properties and foreign buyers; local investors and first home buyers are hard hit by these new restrictions. They are now looking at products and services offered by non-Bank lenders, private lenders and finance companies in New Zealand.
Is it Safe to Borrow Money from Non-Banking Institutions?
Non-bank lenders offer mortgages to so called higher-risk customers. So in short, it’s not risky for the customer but it is potentially risky for the lending institution. The only time you should be concerned is when you’re unable to repay the money you have borrowed from them. If this happens then the same rules apply to non Bank lenders as Banks, there is a legal path which is carefully documented.
If you’ve previously filed for bankruptcy or have no proof of income, your loan application will be rejected by mainstream Banks. If you wait until your credit history improves, you will remain locked out of the property market and you’ll end up paying rent for much longer than you had earlier anticipated. Non-bank lenders offer you low deposit home loans at competitive rates. Professional mortgage brokers like iLender are able to guide you in your choice of home loan. They can offer you best rate mortgages when the Bank says No.
You might not be aware but most of the non Bank mortgage lenders are actually funded by the main Banks – Banks only make money when lending money and non Bank lending is a great way of distributing funds
Are Non-Bank Home Loans More Expensive?
Not necessarily. Non-bank home loan interest rates are sometimes higher than those charged by mainstream Banks. However, non Bank lenders are more flexible with mortgage underwriting so they’re able to offer you products that suit your situation. Be it low deposit, poor credit of lack of provable income (self employed only) . iLender offers the widest range of Bank and non Bank mortgage solutions so they are sure to be able to assist you, regardless of circumstances. Even if they cannot help immediately they will suggest a path of action to make the dream of home ownership a reality as quickly as possible. The rate of interest offered is based on the type of issue present and remember, even if the rate is higher it doesn’t last forever. Whatever holds you back from mainstream lending can be resolved and with a track record as a mortgage payer Banks are more than willing to help. As an example, soon as your credit history improves, the loan can be refinanced to a Bank.
Do You Need to Switch Bank Accounts?
You don’t have to change your daily banking when you are approved for a mortgage through a non-Bank lender. You only need to set up payments for your existing accounts so that your repayments are made on time.
Are There Any Benefits of Using Non-Bank Lenders Instead of Banks?
As well as the obvious benefits of offering a solution where lending restrictions by Banks are not able to, Non-bank lenders offer flexibility, a personalised customer service, and a wider range of products to suit your individual needs.
iLender has more than 20 years of experience with mortgages, debt consolidation and refinancing. Whether you’re a non-resident, an expat or a first home buyer we have a product that’s right for you. To learn more about our home loans and other services, visit us online or call us on 0800 536 337 to discuss your credit issues. Overseas callers dial +64 9 428 5338.