Did you know that banks are not your only option when it comes to securing finance? In fact, there are many NonBank second tier lenders NZ who may be able to help you.
These second tier lenders are often less regulated than the banks and are more willing to look past issues such as bad credit or mortgage arrears. They also have more flexible lending criteria than the main banks.
1. Faster Decisions
In the decade since the financial crisis, middle market CFOs, business owners and financial sponsors have turned to non-bank lenders as viable options for growth capital, recapitalizations and acquisition financing. Many non-bank lenders specialize in making fast decisions based on data, which can be helpful for companies that may not have the time to wait for an approval decision by a traditional bank.
Nonbank second tier lenders also have more flexibility when it comes to credit-risk decisions. Unlike banks, which must review three months of bank statements to determine whether someone poses too much risk, second tier lenders can assess borrowers using just one month’s worth of transaction history.
Consequently, non-bank lenders often offer lower down payments than traditional banks. In addition, the lower down payments and flexible lending structures make it easier for borrowers to secure mortgages with a low FICO score.
2. More Flexible Lending Criteria
Similarly, while some banks may require a borrower to provide three months’ worth of bank statements, second-tier lenders will only look at your most recent transactions to assess your circumstances. It can be particularly helpful for borrowers with irregular income who have struggled to secure lending through mainstream banks.
3. More Creative Lending Structures
Unlike banks, second tier lenders aren’t controlled by the same regulations and can be more flexible with whom they lend. They can also create loan products and services for specific segments of the market the main banks won’t serve. It is why some second tier lenders can be more competitive when it comes to mortgages.
Nonbanks have many different lending models, ranging from the large factoring companies that purchase invoices to small businesses to leasing companies that lease equipment or vehicles and to fintechs that operate online. While they vary in terms of structure, market focus and financing activity, they share the same goal of providing credit to borrowers who might not get it from traditional sources.
In the past decade, syndicated lending from nonbanks has grown rapidly and become a significant share of total borrowing. However, this growth has been accompanied by volatility and higher spreads, reflecting riskier borrowers. In addition, the growing global footprint of nonbanks could affect shock transmissions, with non-banks curtailing lending to foreign borrowers more than they do to domestic ones during a crisis at home.
That is why it’s important to talk to your mortgage broker about the options available to you. They’ll help you find a solution that fits your unique circumstances.
4. Non-Traditional Collateral
Often, second tier lenders have their internal resources or can access additional funding from the capital markets. It allows them to be more flexible with the types of properties they will lend against and the terms and conditions of the loan. It can be helpful to a property investor who may be looking for a specific type of loan that isn’t available from the main banks.
They are also generally able to offer more flexibility with rates and fees than the big banks as well. It can be particularly beneficial for those who don’t meet the strict bank lending criteria, like people with bad credit or who do not have enough of a deposit.
The good news is that the number of NonBank second tier lenders NZ is growing, and they are bringing new products to market to cater for various segments of the property market that the main banks don’t offer. For example, Resimac and Pepper Money are very good for bridging loans and refinancing, while Bluestone and First Mortgage Trust can be very helpful to those looking to buy and hold or flip/trade properties.