There is a growing market for Non-Bank lending institutions.

The main banks can take a conservative lending approach to certain risks within lending applications. This does not mean you are necessarily unworthy of borrowing money; it may mean that alternative lending options are required to be sought.

Here are some examples of non-bank lending applications, where main bank options are unlikely to be available:

Bridging finance where there is no guarantee of repayment of lending and thus proving satisfactory servicing becomes a real issue. We call this ‘open-ended bridging’ and although it can be convenient to buy first, and then sell your property, it may come as a surprise that even though your ‘end position’ works well within bank criteria, the fact your existing property is not in fact sold (unconditionally) at the time you purchase or wish to, the bank could make this challenging if not impossible to obtain approval. We take a pragmatic approach by looking at whether we can try the banks and will produce a well-presented file for their consideration. We will also discuss what non-bank options may exist.

If you are newly self-employed (have less than two years’ worth of formal financials), or possibly you have had a blip year (have earned materially less than in previous years) you may struggle to have finance approved by a mainstream bank. We can look at alternatives.

If you are asset rich and cash poor and wish to raise finance, you will probably need a non-bank lender to provide approval. With changes to the CCCFA at the end of 2021, if you are deemed to fit within CCCFA lending criteria, obtaining lending even from non-bank lenders can prove challenging – we will give you a transparent and professional opinion on this as early on in the piece as possible.

You may have a credit rating impairment such as resolved or unresolved credit adversity. You may be discharged from bankruptcy or have undergone a non-asset procedure. This list is not exhaustive. The banks tend to take a hard line on credit impairment issues, even ones that are repaid that could have been a few years ago.

You may not have an indefinite returning resident’s visa for New Zealand and seek a low equity loan.

Tax debt. Many self-employed Kiwis (in particular) may find themselves in situations where they owe the IRD money and therefore will want to borrow money to clear the debt. It can work out less costly to borrow money from a non-bank as opposed to paying IRD penalty interest and fees. People can end up having debt with the IRD for a number of reasons and we recommend consulting with your accountant or other qualified tax professional for guidance in managing tax obligations.

We have access to a variety of non-bank short and longer-term lending solutions and are enthusiastic about finding you the right option for you. It is important that skill and diligence are exercised with this more specialised lending; an inferior solution may end up costing a dramatic additional amount if the wrong non-bank is recommended and an offer is accepted by you.

An ‘Exit strategy’ is also an integral part of this conversation with an adviser that has your best interests at heart or if the solution is a long-term solution, then understanding this upfront. Your finance arrangement may only sit with a non-bank lender for a brief time. We can approach a bank when and if you meet their criteria. We will explain this in our written advice to you to convey clear expectations and to enable a material understanding of this, as part of the professional process we undertake for you.

If upfront fees are applicable, we will discuss with you as part of our Nature & Scope of Advice process, at the initial stages of engagement.