Here's why borrowers should consider making a switch
As surging interest rates make life tougher for borrowers, non-banks have been reaching out to mortgage advisers to offer alternative lending options to clients who don’t quite fit the model of traditional lenders. But just what is the value proposition offered by non-banks?
Ian Boyce, Avanti Finance general manager property, said non-banks not only offer flexibility, they also work hard to tailor solutions to individual customers.
Read more: More borrowers make the switch to non-banks
“Non-bank lenders are known for their commitment to service and work hard on turnaround times,” he said. “They work closely with the adviser to help support the right outcome for them and their customer.”
Sam Burgess, First Mortgage Trust (FMT) head of lending, said that unlike in banks, where credit decisioning is heavily influenced by risk-grade models, non-banks take a more common-sense approach to their credit decisioning processes, as they understand that not all things fit in the box.
“We can ring-fence a transaction to provide a suitable structure and generally assess in isolation without the need to group all activity,” Burgess said.
The FMT leader said non-banks are also pragmatic, asking questions such as: Does this deal make sense? Is it good for the client and funder? Is the exit strategy acceptable? Can we mitigate any perceived risks?
“If the key metrics of the deal can be ticked and we’re satisfied with the conditions, then we have the ability to provide finance,” Burgess said. “We can also provide interest-only or capitalised-interest options.”
Another significant point of difference at FMT is that it has no clawback on referred business.
“We understand the deals and the need for a quick turnaround in certain circumstances,” Burgess said.
In the case of Resimac New Zealand, Luke Jackson, general manager, said what makes the lender unique is that it’s “big enough to be a contender but small enough to be nimble,” meaning it can offer an agile response to market conditions and create products and services and products that meet customers’ needs in real time.
In response to the banks’ sledgehammer approach and the tighter lending rules, for example, Resimac introduced fixed rates to help give certainty to specialist borrowers. It also launched new products for multi-property investors.
“These responses are possible because Resimac has autonomous New Zealand management, enabling the business to be more in tune with the needs of Kiwis,” Jackson said. “Resimac also has the strength of a multinational, which keeps our funding costs low.”
Craig Rolls, Basecorp Finance head of lending, said that in a financial environment that’s becoming more complex, Basecorp remains “focused on flexibility and simplicity – and doing this all in a timely manner with quick turnarounds.”
“We also continue to put a human touch on lending at a time when mainstream banks have largely abandoned this,” Rolls said. “With our stable lending team, advisers can deal regularly with familiar faces as they work through a mortgage application.”
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