Banks are traditional financial institutions that offer a wide range of banking products and services, including home loans. They also have well-established reputations and a widespread network of branches.
With major banks tightening their lending criteria, non bank lenders and alternative mortgage providers are filling the void. Here are the key advantages of top non bank lenders:
1. Low deposit requirement
The top non bank lenders NZ have become a popular alternative to Australia’s Big 4 banks when it comes to personal and home loans. They offer a variety of competitive benefits for borrowers, including lower rates and set-up fees.
They borrow funds at wholesale rates and pass these savings on to borrowers, which makes them an attractive option for those seeking a home loan or personal loan with low deposit requirements. Unlike larger banks, which are incentivised to underwrite large balance loans, non-banks have less cost structure and can focus on smaller balances, giving them an edge in the market.
In recent years, non-bank lending has expanded rapidly, both in volume and size. This increase has been driven by a heightened need for middle-market companies to access debt financing due to tightened credit procedures at traditional banking institutions. Non-bank lenders also provide a more flexible lending platform than banks and can provide borrowers with more expansive loan structuring options.
2. Highly personalised service
As they are less regulated than banks, top non bank lenders NZ can provide a more personalised service. They often specialise in a particular type of loan or industry and can offer tailored advice and assistance. Non-bank lenders also tend to have a lower branch network and operate entirely online, which may make them less convenient for individuals who prefer in-person interactions.
Another advantage of choosing a non-bank lender for your home or personal loan is that they are often willing to take into account factors such as your employment status and income. It can be beneficial for self-employed borrowers who struggle to meet the strict criteria set by traditional lenders. In addition, non-bank lenders can often offer more flexible terms and conditions compared to banks.
Additionally, many non-bank lenders have streamlined their processes and can offer competitive interest rates for borrowers with excellent credit scores. It makes them ideal for borrowers seeking a quick and easy home or business loan solution. Non-bank lenders are also known for their willingness to take on higher risks than traditional banks and can offer loans to borrowers with less favourable credit profiles. It can be particularly beneficial for small businesses looking to expand. This flexibility also allows them to pass on savings to consumers through competitive rates and fees. It is especially true for mortgages, where top non-bank lenders can offer competitive low-deposit home loans and a variety of loan features that traditional banks cannot match.
3. Competitive rates
Many non bank lenders offer competitive home loan rates. That is because they focus solely on mortgage lending and do not have the same overheads as a traditional bank, such as savings account services or credit cards. It allows them to pass the savings on to their customers in the form of competitive home loan rates.
Another way that non-banks are offering competitive home loan rates is by streamlining their lending process. They were among the first to introduce online loan applications and allow borrowers to answer questions quickly to get a loan approval or rejection. It has prompted incumbents to follow suit and streamline their processes.
Non bank lenders are known to have a higher tolerance for credit risks. They often give out loans to borrowers who would not meet the criteria of prominent creditors and mortgage insurers, such as specialised lo doc loans or funds that allow some past credit impairment. It allows them to lend to a wider range of consumers and may explain why their interest rates are lower than those of larger banks.
4. Flexibility
With the increasing number of middle market companies facing severe liquidity issues as a result of tightened bank credit procedures, non bank lenders have emerged as valuable alternatives. They provide a range of advantages to individuals and businesses that seek alternative financing options, such as greater flexibility, faster turnarounds, and specialised loan structuring.
Many top non bank lenders NZ specialise in lending to specific industries and have a greater appetite for higher-risk borrowers. It makes them ideal for borrowers with poor credit ratings or who are self-employed. They are also more likely to consider alternate collateral, such as recurring revenue and customer purchase orders, as well as the ownership of intellectual property, which banks are typically reluctant to accept.
However, these benefits can come with some downsides. One potential drawback is that non-bank lenders may be vulnerable to economic turmoil or a financial crisis, as they are not subject to the same strict regulatory compliance as traditional banks. Additionally, the lack of a physical presence can deter some individuals who prefer face-to-face interaction. However, with the right approach and expertise, these limitations can be overcome.