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What if you don't fit at the bank?

What if you've tried your bank but they won't give you a mortgage for whatever reason... What options do you have then?

Although 95% of the loans we do are through the main banks we like to have an lending option up our sleeve to suit everyone.

In this blog we detail some of the reasons why you might not fit a main bank and what the other options look like.

Why can't I get finance at a main bank?

  1. Not enough deposit
  2. Bad credit history
  3. Not long enough in business
  4. Poor loan repayment or bank account conduct
  5. Can't prove income
  6. Borrowing for a new business or non standard investment
There are many more reasons why a bank may not be able to help but these seem to be the main ones. Fortunately we've got lenders who can work around the above.

The main exception is deposit - most non bank lenders will only lend up to a maximum of 70% of the value of your property. This is helpful if you're stuck with the new investor rules where banks can only lend up to 60% of the value of a rental property but it won't help if you've got just a 5% deposit. Main bank options generally start from 10% deposit and we can help you there if those other things are not a problem.

Who are these lenders?

We've got a wide variety of options but generally they are finance companies who have investments and want to lend their money out to home owners as they want the extra security of this rather than lending for car loans or on home appliances.Some are private individuals seeking a higher return than the 2-3% they would be getting in Term Deposit at the moment.

​So what's the catch?

The cost is the only real catch. Interest rates vary from 6-10% depending on the risk and most lenders will charge an application fee of some sort. Even though the cost is high in the short term when you consider the other benefits of being able to buy a property they may outweigh the extra few thousand dollars or interest you will pay in the short term. Loan terms vary but they are often shorter than the up to 30 years offered by the bank. Although the loans are generally interest only to keep costs down.

Having a plan is key

It's really important to us when taking lending with a "non bank" lender that we have worked through a longer term financial plan with you so that we know exactly how we'll get you back to borrowing at a main bank. We really believe non bank lenders are just a short term fix.

We've had great success with people getting themselves established in business and then being able to take them back to a main bank. A common one is waiting for their credit or repayment history to be clear and then refinancing back to a bank.

So if you, or anyone you know, is struggling to get lending from a bank for one of the reasons listed above then we might just have an option to get them sorted so they can continue to work to their long term financial plan.

Contact us to discuss how we can help. We look forward to finding you the right solution for you.

Adam, Claire and the team at My Mortgage


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