There are now signs of increased confidence returning to the New Zealand economy but the banks are being impacted by lending rules which limit what they can offer, yet the non bank lenders are still able to do many of the deals that banks can’t.
With what appears to be a stable government along with a growing and stable economy people are wanting to live in New Zealand and while this is very positive it does put pressure on housing in the large cities like Auckland.
In Auckland the property market continues to gain value as demand outstrips supply, and with the various measures introduced by The Reserve Bank many buyers are looking outside of Auckland and this has seen an increase in housing prices across the country.
The interest rates my be at all-time low’s but the lending rules have made things tougher. In times like this the banks are not always helpful.
Bank Criteria Not Always Helpful
As mortgage brokers after the LVR restrictions were introduced we continue to see the impact of the banks being restricted in the lending practices.
On one hand we must give the banks credit as they have been pretty aggressive with low mortgage interest rates and cash contributions with any borrowers with at least 20% equity.
But not everyone fits the bank criteria and there is now an increasing need for non bank lenders who can assist those clients with either residential or commercial non bank funding needs.
When the bank says NO there are other non bank options.
The non bank options for finance are not a last resort option and in many cases non bank lenders offer better and more flexible solutions than the banks are able to offer.
Banks Say “NO” Too Often
Banks have specific criteria and to provide anything ‘outside the box’ can be difficult and frustrating for the bank staff as they often know that these are good deals.
A low deposit or gifted deposit does not always mean people are bad savers. Sometimes those people have spent a considerable amount of time and money training or living overseas.
A credit glitch on your Veda check can be caused from a business or relationship issue and some credit glitches are not known until it is time to apply for a loan at a bank. Also many people that have tax arrears have incurred large tax liabilities due to peaks in their income or changes to business structure.
Self employed people often are unable to provide suitable proof of income. Most banks require 2-years financials to prove income which can mean you need to be in business for well over 2-years before you are in a position to provide these. Most self employed people have accountants trying to reduce the tax they are required to pay and while this makes common sense, it can make it hard to show you have enough income too. Mortgage brokers still have the ability to get low doc home loans for self employed people.
If you were an employee they just need payslips for a few weeks to prove income!
These issues should not automatically be reasons for anyone to be deemed a higher risk – but they are.
Non Bank Lenders Can Be Cheaper Too!
You might be surprised at the interest rates that some non bank lenders are able to offer with lenders like Resimac Home Loans offering floating mortgage interest rates from as low as 5.34% which is actually lower than the floating home loan interest rates offered by the main banks.
Compare Floating Interest Rates
People have the perception that the “big banks” are cheaper, but this is not always the case. Some specialist lenders like NZ Home Loans can be more expensive, but it doesn’t mean they all are.
Of course there is more to a good home loan than just the interest rate and this is where a good mortgage broker is able to help advise you on the differences.
Speak To The Best Mortgage Brokers
Some of the best mortgage brokers in New Zealand like the team at The Mortgage Supply Company have a better understanding of alternative non bank lenders in the market today and because of this understanding they can often get finance for people after the bank has said “no” and sometimes even with that same bank.
If your bank has said “NO” do not despair and do not be pressured into accepting a non bank loan offer with higher interest rates or fees unless you have spoken to us about all of the alternatives first.
There are some non bank lenders offering very competitive products and interest rates.
