When people need to fund property renovations or buy rental properties that don’t fit the bank’s affordability criteria, short-term lending options like second/caveat lending funding are a popular choice. It is essential to understand the differences between these two types of finance.
Mortgage Masters can help Kiwis find lending solutions where the bank says no through close working relationships with various non-bank lenders. These include near-prime, specialist and short-term loans. For more information about the non bank lenders NZ, click here.
Why choose a non-bank lender?
While the central banks are still the first port of call for many borrowers and mortgage brokers, they’re not always the most suitable option. Often, it’s the smaller mortgage lenders who can offer competitive rates and a wide range of products. It is especially true for those borrowers who don’t fit the bank’s usual criteria, including those who are self-employed or have a poor credit history.
Non-bank lenders make up a small percentage of the lending market in New Zealand, but they are increasing. They’re backed by a wide range of investors, some from overseas and many from the big New Zealand banks trading on the share market.
Non-banks are an excellent choice for borrowers who want to own their own home or property but have been knocked back by the banks because they don’t tick all their boxes – particularly those who are self-employed or first-home buyers. Contact a mortgage broker today to discuss your options.
Specialist loans
Specialist loans are a type of mortgage that allows Kiwis to borrow at higher loan-to-value ratios than banks are allowed. It is especially important for first-time home buyers and people who have a low credit rating, which can prevent them from getting a bank mortgage.
These loans are also helpful for those who have unique income streams, such as rental income from an investment property. In addition, many New Zealanders are choosing to become self-employed or receive payment from overseas. These income sources can have negative ramifications on a bank mortgage application.
As a result, non-bank lenders have stepped in to fill the gap in short-term property finance and bridging lending. They can offer flexible lending criteria and fast-track approvals. These services are an integral tool in the mortgage adviser’s kit when a client does not fit the bank’s strict standards. These lenders also have various specialist loan options, including those for the recently self-employed or those who have experienced redundancy, relationship breakdown or business closures.
Short-term loans
With the Reserve Bank of New Zealand growing increasingly harsh on mortgage lending restrictions year after year, it’s become necessary to look beyond the big banks to find funding for your next home. Non-bank lenders in New Zealand can provide the finance you need by being more flexible with their credit standards, allowing them to meet the needs of those who don’t quite fit into the criteria that central banks have. In addition, they can offer competitive interest rates and outstanding loan or mortgage structures. For more information about the non bank lenders NZ, click here.
Flexibility
Many Kiwis who approach non-bank lenders do so after a central bank has declined their mortgage application, typically due to low documentation or a poor credit history. Non-bank lenders have a much greater risk tolerance and can offer home loan solutions to borrowers who would otherwise not be approved for a traditional loan.
For example, some non-bank lenders can finance property purchases even if you have other income streams that are not considered in the standard affordability calculations by banks (commercial rent, Airbnb income, government subsidies, overseas income). It can significantly amplify your borrowing capacity.
Non-bank lenders also tend to have streamlined processes, meaning they can respond more quickly to applications and approve and disburse loans faster. It is particularly beneficial for borrowers who need fast finance and have time-sensitive financial needs. Click here for more information about non bank lenders NZ.