Do you think you cannot refinance from a non-bank to a bank yet?
Maybe it’s time to think again.
There are a number of reasons that you might have gone to a non-bank lender with your mortgage, but whatever that was you will still most likely want to refinance from a non-bank to bank and get the lower interest rates.
In most cases, the aim is to get back to a lower cost with the bank when possible.
Some of the reasons people go to non-banks are because of account conduct or credit issues, the inability to prove income, or needing to get money out for a business or refinancing some tax debt. Most of the time the issue that makes you go to a non-bank is something that you expect to be temporary, and you want to then refinance from non-bank to a bank.
Of course credit issues like defaults will only stay on your credit report for 5-years regardless if they have been paid or not. It’s important to know what is on your credit report, and the good thing is you can easily get a free report from Centrix.
Income is the harder one if you are self-employed – the banks typically want 2-years of your financials and that’s often a problem and especially recently as the economic conditions have been challenging and plenty of self-employed have been doing it tough. Normally if you were refinancing your mortgage the bank would use an average of the last 2-years and that means just one bad year can dramatically reduce what a bank would let you borrow.
The real problem is, sometimes you get stuck with a non-bank for a lot longer than intended because things haven’t necessarily improved as quickly as you want.
Do you feel stuck with a non-bank?
It can be frustrating when you know that you can meet the repayments of the non-bank with no problems, but then when you apply to a bank they look at your income and say you cannot afford it.
That’s been the way banks have treated people who want to refinance from non-banks for a number of years, and it has certainly been frustrating.
Would you prefer to refinance from a non-bank to a bank?
Now For The ‘Good News’
The good news is we now have an arrangement with a New Zealand bank where proving your income is not as hard as it used to be. The bank is actually applying some common sense to how they assess your mortgage and the affordability of it. They will look at your current mortgage repayments, and on the basis that the repayments have been paid on time for a minimum of 90 days then they will consider refinancing a mortgage from a non-bank without the stringent requirements to prove income.
We still have to present the application and ensure that it is affordable, but we can assess the income in a slightly more relaxed fashion and we don’t need to prove it to the bank in the way that they would normally want.
The key thing is we need to be putting you into a better financial position, which obviously would be what we’d want to do anyway.
From what we understand the bank has made this offer to a just few selected mortgage advisers, and that means it’s not a standard policy that many advisers even know about. The team at Mortgage Managers have been given access to this and have been able to help a lot of people to refinance from a non-bank and get some very competitive interest rates too.
So just to recap on that:
- We still have to know what your income is, but if your income’s only recently improved, then we can use that improved income.
- We need to know that you have paid your mortgage on time for a minimum of three months and provide a statement to prove that.
- You need to have a minimum of 20% equity – that means your lending can be no more than 80% of your homes value.
- Plus, we need to do a credit check and ensure that you haven’t got any issues there, or if they are small issues, we need to explain those.
We’re not saying that we can refinance every non-bank loan, but it’s certainly given us an opportunity to refinance a lot of loans especially where proving income has been the critical factor.
If you’ve kept the mortgage repayments up to date and even if you can’t prove that income to the bank’s normal requirements, then you should contact us and see if you can refinance from a non bank to a bank.
