Non-bank lending: When and why you may need it

Entering a mortgage is a massive step in buying your own home. This is why it’s so important to choose your lender wisely and look at all your options, including both bank and non-bank lending options. It’s true that non-bank lenders haven’t always had the best reputation, but more and more home buyers are discovering just how effective this type of lending can be, especially if their bank says no.

What is non-bank lending?

Non-bank lending refers to securing a loan from an institution other than a bank. It could be a credit union, or building society. For most home buyers, approaching their bank for a loan is the easiest option. However, for Kiwis with a low deposit, those who are self-employed, and those without the best credit history, securing a loan from the bank can be challenging.

This is where the option of non-bank lending comes in. In many cases, non-bank lenders will approve a loan previously declined by a bank.

As lending restrictions have tightened within New Zealand, many home buyers are also having to discount traditional bank lending and look for an alternative solution. Non-bank lenders are not affected by LVR restrictions imposed by the Reserve Bank which means they can often provide a solution for first home buyers that have a low deposit.

The two categories of non-bank lending

Non-bank lenders fall into two categories: Mortgages, and short-term loans. The three big non-bank mortgage lenders in New Zealand are Resimac, Sovereign, and Liberty.

And there are a range of finance companies that offer short-term lending.

The pros of non-bank lending

• It provides more options when shopping around for a mortgage.


• Home buyers are not constrained by poor credit history, low deposit, or the inability to prove income with non-bank lending.


• Non-bank lenders are not restricted by Reserve Bank LVRs.


• The pre-approval process can be much quicker with a non-bank lender which can make all the difference when needing to move into a property quickly.


• Offers home buyers a solution when the bank says no.

Consider whether non-bank lending is right for you

Generally, non-bank lending is ideal for those who have been declined by their bank, either because they have poor credit history, are self-employed, and cannot prove their income, or have a low deposit.

For more tips on home buying and the like, check out our Summit Homes blog!

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