We are asked this a lot, so here’s our guide to ‘close to, but not a Bank, lending’.
The first thing we ask is why? What is it about the application that makes the Bank say No?
There are multiple reasons and here are the top five.
“I’m self employed and the Bank won’t accept my true income”.
This could be because of the period of self employment, or you have a great Accountant who keeps your profits low. Banks go off ‘Net Profit’, although some can be a bit flexible when it comes to drawings and add-backs.
Solution: Could be a Lo Doc or Alt Doc loan from a Non Bank lender. These rely on alternative means of income verification and can be very useful if self employed for a short period of time.
“I work overseas (or my income is derived from overseas) and the Bank deduct a huge amount for their servicing calculators”.
There are around a million Kiwi’s in this situation, so it’s a big issue. Banks can scale overseas income to around 56% of the gross earnings. This means a massive reduction in borrowing capacity.
Solution: A Non Bank lender takes 100% of earnings if in Australia and 90% if in another major centre. This means a much higher borrowing capacity for both owner occupied and rental property. Borrowing when overseas need not be a drama and one Non Bank lender’s floating rate is lower than the Bank!
“My bank statements are not that flash and the Bank won’t assist”.
Not uncommon, especially coming out of Covid with the extra pressures on us all.
Solution: Don’t supply them! One of our Non Bank lenders does not require personal Bank statements at all and their floating rate is lower than a Bank.
“I own my home and want to buy a rental. The Bank wants a 40% deposit/equity for the rental purchase and I have 20%”.
Banks are governed by the Reserve Bank when it comes to Loan to Values (LVR’s), so it is not a question of they won’t lend, they can’t.
Solution: A Non Bank lender can go to 80% on both properties, so they take security over both. Their rates are very similar to a Bank.
“My bank has told me I can’t extend my interest only period on my Investment Mortgage, forcing me to take Principal and Interest and this is putting my cashflow under extreme pressure.
Solution: We hear you. Again a Non Bank lender at pretty much Bank rates can assist here with a 20 year term and up to a 20 year period of interest only. Floating rates mean you can overpay on your terms to reduce the loan or simply sell when the time is right. This puts you in control, not the Bank.
There are many other situations where Banks cannot assist. This may be in part due to regulations, interpretation of new rules, (CCCFA) for example, appetite for certain types of customers and/or products.
Whatever your circumstances, we are sure to be able to assist or put you on a pathway to success.
All you need to do is ask.
Call 0800 536 337 (0800 LENDER) or email [email protected] and speak to one of our advisers to see how we can help.