What is a non bank lender and is it right for you?
Most mortgages in NZ are done with Mainstream banks, they have the capacity, and the structures to make it easy to sort. But there are also non bank mortgage lenders, who fit into 3 categories, prime, 2nd tier and specialist.
Prime – these are lenders who are basically the same as a bank without being a bank. Rates will be similar, so will policies, but often they will have a little more leeway on slightly outside the box lending than the main banks so if a loan won’t work with a main bank we can try there.
We use them if you don’t like the banks, or we need a slightly specialised loan.
2nd Tier – this is usually for when the bank says no, due to bad credit rather than affordability. More expensive than Prime lending, they will lend to people with lots of defaults, or even discharged bankrupts, and people about to go to mortgagee sale, or with too many consumer debts.
We use them when the banks won’t do it, but the benefit to the client is there. more expensive than the bank, we often only stay for as long as it takes to clear up the credit report, though often by the time you clear the consumer debt as well, the payments might actually be lower.
Specialist lenders – primarily looking at outside the box scenarios, and where income is not good, but equity is, and generally short term. Examples of specialist loans we have done:
9 months lend covering the interest as well, to help someone get back into the work force
12 months funding to get dad into a rest home, so they can sell his home that’s in an odd area and may be hard to sell.
Retired family borrowing money against their house to help adult child buy a business.
Bridging finance to help buy a new home before selling the current one.
Generally short term, complex loans that have a clear exit plan as part of the plan. Always more expensive than prime and 2nd tier, but if you need the money, they are a good solution.
At DUX Financial we use the right lender for you, and have no real favourites, other than for how they work for you. so if you have a loan scenario that’s a bit more complicated than the banks would like to do, or they have said no, have a chat to us, you might be surprised by what can be done.