Common questions about non-bank lenders
Estimated read time: 3 Minutes
What exactly is a non-bank lender? As a proud non-bank ourselves, we explore the facts and expose common misconceptions about these institutions who play a vital role in Australia's home loan and lending ecosystem.
What is a non-bank lender?
Are non-bank lenders as trustworthy?
Absolutely. Non-banks are perfectly trustworthy home loan providers who help drive competition with the mainstream lenders in Australia’s mortgage market. They offer borrowers an alternative to a traditional bank loan, which not only gives people more choices, but provides an option for those who fall out of the big bank’s risk appetite.
Did you know? Non-banks make up a significant part of the home loan market, lending billions of dollars to fund Australian home loans each year.
Do non-bank lenders only give loans to people with a bad credit history?
Not at all! Non-bank lenders are an option for prime borrowers - those who could go to a traditional lender and have a squeaky-clean credit score. However, non-bank lenders often specialise in providing loans for so called non-conforming borrowers including self-employed people, first time buyers and property investors.
Some borrowers get knocked back simply because they don’t tick all of the bank's boxes, like having a credit history, or meeting Lenders Mortgage Insurance (LMI) providers’ criteria.
One example: if you’re self-employed you might not have evidence of cash flow or PAYG statements so your loan application may be rejected by a traditional bank lender.
But just because an applicant has been turned down for a loan by a bank doesn’t have to mean they’re a credit risk. Which is why many non-bank lenders, including here at Pepper Money, take all aspects of your circumstances into consideration and use specific lending criteria when assessing your home loan application.
Are non-bank loans more expensive?
Many things can affect the interest rate you get offered; including market influences, the nature of the loan you’re looking at and credit assessment requirements.
At Pepper Money, every home loan application is individually assessed based on its own merits, with the assessment carried out by a real person who’ll take the time to understand your situation and look to provide loan options and interest rates suited to your individual circumstances.
Are non-bank lenders financially secure?
Do non-bank lenders have fewer product options than the banks?
If anything, non-bank lenders tend to offer a wider range of products that are suited to different niches. Often their approach is more flexible than the banks and their options are often tailored to borrowers who do not fit the traditional lending criteria of the banks.
At Pepper Money, we offer home loans for all types of borrowers; from full-time PAYG customers with a healthy deposit, to those self-employed and small businesses owners working with alternative documentation.
Our approach looks at all aspects of a person’s individual circumstances and credit requirements to help find the right loan for their situation.
Turned down for a home loan? A non-bank could offer more flexible options.
Having a home loan application turned down happens to thousands of people every year. But if it happens to you, don’t be discouraged. We look at the options available.
Contributor | Anthony Moir, Treasurer
Anthony joined Pepper Money in February 2021 as Treasurer. With over 25 years of experience in treasury and debt capital markets, he has worked with a diverse range of bank and non-bank lenders. Read more.
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