It’s currently a struggle for every New Zealander: trying to get the bank to approve their home loan. Lending restrictions are tighter than ever, even for New Zealanders with a perfect credit history.
Luckily, non-bank lenders offer an alternative approach that bypasses traditional lenders who grow increasingly harsh in their financing year after year. For Kiwis who are unable to secure financing with a bank, it’s important to browse the non-bank lending market, as you might be surprised at what’s on offer.
Why non-bank lending?
Non-bank lending is any mortgage not obtained from a bank. Non-bank lenders are funded in a variety of ways, including institutional leaders, peer-to-peer and, occasionally, self-funding – many non-bank lenders receive funding from trading banks! iLender mortgage brokers NZ are leaders in Non-bank mortgages.
This is an especially viable option for Kiwis with poor credit scores, those who are self-employed, or first home buyers with a low deposit. These non-bank lenders don’t have to dig through your financial life – one does not require bank statements! The pre-approval process is generally much quicker, meaning you can get the ball rolling on your property journey with less stress.
iLender are New Zealand based mortgage brokers who put you on the path to owning property in New Zealand. Independent of any lender or bank, they have provided top quality non-bank lending for Kiwis across the country for 15 years. Currently, non-bank lenders account for less than 5% of residential lending but this is predicted to treble in the coming years with continual restrictions imposed by regular bank lenders. As non-bank lending has evolved over time, iLender has developed 4 ‘tiers’ of lending.
4 Tiers of Non-Bank Lending
1. Near Prime
Near Prime loans are long-term mortgages offered at close to bank rates. These are perfect for borrowers who just fall short of the requirements of big banks. Offering many benefits similar to those of regular financing, investment loans up to 80% ‘loan to value’ are available from some non-bank lenders, either as a stand-alone or as a bundled product, which consolidates multiple financial needs into a single loan. New Zealand’s fastest growing Non-bank lender has done away with the need to see bank statements. This means if you are partial to a few ‘flat whites’ or the odd flutter on Lotto, this will not affect your mortgage application.
2. Specialist
Specialist loans are medium to long-term mortgages designed for recently self-employed Kiwis who are unable to easily verify their income, or those with poor credit histories. Many Kiwis suffer from a ‘life changing event’, such as redundancy, relationship breakdown or business failure. Specialist loans are ideal in this situation and although the initial interest rate may be higher, these decrease over time to bank rates.
3. Short Term
Short Term loans are generally offered up to 12 to 18 months, ideal for those looking to fix an issue or improve their property. This short time frame allows enough time for renovations, re-cladding, building additions, or ‘flicking’ a property. Also ideal for those looking to fix a short term problem.
4. Second/Caveat Lending
Second Lending involves smaller sums over a short-term period, typically up to $100,000. Exit strategies are fundamental as lenders don’t offer long-term loans. Like Short Term loans, Second Lending is an optimal loan plan for property issues needing to be fixed; this often occurs before selling the property, enabling repayment of the loan through the sale. Second Lending funds are quick to get approved and have high approval rates, providing immediate cash flow for borrowers. This is useful for Kiwis to maintain financing while attempting to secure traditional mortgage funding.
The lowdown
Non-bank lending has revolutionised the property loan market by opening doors to Kiwis who would otherwise struggle to secure financing from a bank. With the increasing regulation and restrictions imposed on banks, non-bank lenders are more important than ever.
Don’t let ‘no’ squash your dreams of owning a home. Contact iLender today and find out what works for you. Feel free to brainstorm with one of the experienced team members to start your home ownership journey.
