Banks are under pressure to limit borrowing, while buyers still need to borrow large sums in order to purchase property or manage debt. Guest blogger Jeff Royle, of iLender, explains that non-bank lenders may be the answer.
When the bank says no
Under increasing external pressure from the Reserve Bank, and internal pressure from credit-tightening measures, banks are limiting borrowing. This in turn has led to a huge increase in demand for loans from non-bank lenders.
When the bank says no, a non-bank lender can be the answer. Jeff Royle see situations where people want to purchase a property, refinance, or consolidate debt and stay in their current property. We’ve also had desperate clients come to us for help, having gone unconditional on a property in the belief the bank will lend to them, then being unable to settle the purchase.
Short-term fix or long-term loan
Non-bank loans fall into two major categories – long-term mortgage solutions and short-term ‘fix’ loans designed to solve a specific problem.
Rates are often comparative to bank rates if you look at similar loan applications. However, for many people seeking a non-bank option, interest rates are secondary to simply solving the immediate problem. Many non-bank loans are a temporary solution, and are replaced by a longer-term bank loan eventually.
Banks vs other lenders
Many people still think that non-bank lending comes with higher risks. For the most part, this is simply not true. The same consumer protection rules govern both banks and non-bank lenders, which gives you recourse if anything goes wrong, and means non-bank lenders can’t use unfair or misleading contracts.
Non-bank lenders are often easier to deal with – they are less restricted by the Reserve Bank regulations, they usually have less paperwork to complete, and can often process applications and get you sorted on the same day.
One problem with non-bank lenders? They don’t have the profile of a big bank, so borrowers often don’t know they exist or how to contact them.
This is where mortgage advisers come in. iLender has contacts and connections in the non-bank network, so if you’re looking for a non-bank loan or a solution to your financial problems, talk to Jeff and the team at iLender first.