5 myths about non-bank lenders debunked
- Posted Getting Started
Many myths around non-bank lenders exist – almost all of them untrue.
We debunk some common myths about this segment of Australia’s home loan and finance system.
Myth #1: Non-bank lenders are not trust worthy
Busted: Non-bank lenders are trustworthy home loan providers who help drive competition in Australia’s mortgage market. They offer borrowers an alternative to getting a loan from a bank, which gives you more choice.
Non-banks make up a significant proportion of the home loan market, lending $1.2 billion of all home loans written in February 2015. That’s 7.6 per cent of all outstanding home loans written in Australia that month.[i]
Myth #2: Non-bank lenders only give loans to people with impaired credit
Busted: Non-conforming borrowers are from all walks of life, including self-employed people, first time buyers and property investors.
Just because an applicant has been declined for a loan by a bank doesn’t necessarily mean they’re a credit risk. Some borrowers get knocked back simply because they don’t fit the Lenders Mortgage Insurance (LMI) providers’ criteria. If you’re self-employed then you may not have evidence of cash flow or PAYG statements which can mean your loan application gets rejected by bank lenders. There are many reasons a loan application can be rejected but at Pepper we take all aspects of your financial circumstances into consideration, rather than using blanket rules for all borrowers.
Myth #3: Non-bank loans are expensive
Busted: Loans offered by non-bank lenders are advertised at competitive interest rates. Multiple factors can impact upon an interest rate including market influences, the nature of the product and our credit assessment requirements.
At Pepper, every home loan application is individually assessed based on its own merits, with the assessment carried out by a real person, not a computer – even with loans for discharged bankrupts or other non-conforming loans. This ensures we can provide the right loan options for the borrower’s circumstances and at competitive interest rates.
Myth #4: Non-bank lenders are not financially secure
Busted: The non-bank sector has undergone significant changes in the years following the global financial crisis.
Non-bank lenders must comply with the same consumer credit rules and regulations as the banks. Loan applications will only be approved if the application satisfies Pepper’s loan suitability criteria and credit assessment requirements, including whether the borrower is able to pay the minimum repayments for the loan. Read more about Pepper’s responsible lending practices.
Pepper is funded by some of Australia’s leading financial institutions so you can rest easy knowing that we can support your loan with us.
Myth #5: Non-bank lenders have less product options than the banks
Busted: Non-banks provide a wide range of finance options. They offer flexible products and, because of their unique approach to lending, they tailor loans for borrower’s who do not fit the lending criteria of the banks.
Pepper home loans are also available as both full doc and alt doc. Our approach looks at all aspects of your financial circumstances and credit requirements and our Lending Specialists are happy to help you find the right loan.
Pepper believes that a healthy home loan market has space for the big banks and non-bank lenders like us: a wide range of lenders improves competitiveness, drives innovation and ultimately gives you more options.
[i] Housing Finance, Australia, February 2015, Australian Bureau of Statistics