New Zealand Home Loans: 4 Types of Non-Bank Lenders
Buying a home in New Zealand can often be a mix of emotions, with lots of excitement and hesitation. Rest assured; many questions will come up while trying to get your finances in order. This is especially true if you are struggling to qualify for a loan from a big bank. Rejected mortgage applications may be due to outstanding debt, poor credit history or lack of proof of income. However, these circumstances don’t mean NZ property investment and home ownership are out of reach.
As experienced Auckland mortgage brokers specialising in independent financial advice, Mortgage Masters can connect you with non-bank lenders. Let’s look at each tier of non-bank lending to give you a better idea of what to expect when buying NZ property.
Near Prime Lending
Near prime lending is ideal for borrowers who are just shy of big bank requirements. These long-term mortgages offer interest rates not much higher than bank rates, with a lot of similar benefits to regular financing. Some non-bank lenders offer standalone or bundled investment loans with up to 80% loan to value. If you need to consolidate several financial needs into one loan, near prime lending may work for you, too. It helps that a growing number of near prime non-bank lenders are forgoing bank statement checks, so a little bit of discretionary spending here and there won’t hurt your application.
Specialist Lending
Non-bank lending also includes specialist loans, which are great for newly self-employed Kiwis who cannot easily prove their income level. Those with poor credit history or a recent redundancy, business closure or relationship breakdown may also use specialist lending for a medium or long-term mortgage. Even though the initial interest rate may be higher than the big banks, these rates will drop over time.
Short-Term Lending
Short-term lending is usually for 12 to 18 months and offers a way to bridge the gap for building additions, renovations or flipping a home. Many New Zealanders fix short-term problems with this home loan option that allows them to refinance later. If you need to pay for recladding or significant repairs to your home, then short-term loans may be your best bet.
Second/Caveat Lending
Finally, for Kiwi first home buyers and investors who have been knocked back by big banks, second lending may make a difference for smaller sums in the short term. Second lenders usually offer up to $100 000 to fix property issues, particularly before a property sale, ensuring repayment through the sale. There are high approval rates for second/caveat lending, so borrowers can get cash fast and maintain financing. You can also use second lending options as bridging finance while you wait for traditional mortgage funding to come through.
Explore Non-Bank Lending with Mortgage Masters
Rest assured there are lending options for you, even if big banks have rejected your NZ home loan application. Mortgage Masters is here to help you explore near prime, specialist, short-term and second/caveat lending. Get in touch with our team today to discuss the best home loan options available to you.
