House hunters in Australia are an active bunch, and the real estate market is ripe for the picking. Reuters reports sinking prices due to economic aftereffects of the coronavirus pandemic, so it’s now a buyer’s market with artificially and temporarily shrunken pricing all across the county.
Bank Lenders vs. Non-Bank Lenders
Chances are, you and your family are considering a move from your current home but are lost in the fine print of the big bank lending practices. Banking regulations tend to confuse the average homebuyer, especially first-timers. Securing the funding for a home can be a daunting task for even the most experienced buyers. This is where a non-bank mortgage lender comes in. In short, these are small businesses that compete with the banking sector to provide reasonably priced lending to a wider group of borrowers than the typical bank lender will extend a line of credit to. Whether you lack a long-established credit history, have a lower credit rating than a bank might like, or are new to the professional world and cannot easily put down a large deposit, non-bank lenders may be willing to step in to help you find the right mortgage solution.
Traditional Bank Challenges
The reality is, times have changed, people are leaving school later, finding saving harder than ever, and working in different configurations than past generations. Australians are now likely to make five to seven career changes during their lifetimes, much more than their parents before them. With all this change, financial institutions, particularly smaller banks, are less likely to approve borrowers for lending based on a stringent set of actuarial rules that govern the bank sector.
Non-Bank Lending Benefits
Non-bank lenders are not bound to these in-house regulations. They’re far more flexible and are able to set their own criteria and even step outside these lines if a loan officer feels he or she can make a positive judgment in your favor. As a non-bank lender in Australia, an institution is free to practice discretion in its lending decisions rather than sticking to a hard rule book. Likewise, non-bank lenders can typically provide access to funding faster than a bank lender, reducing the gap between an offer and closing, and giving buyers greater peace of mind in the process. These corporations take the hassle out of borrowing for a house so you can focus your attention on what really matters—finding the property that’s right for you and your family and getting settled in your new home.
Non-bank borrowing is also a great option for investment properties or when planning to buy land and build your dream house. These fall outside the usual parameters of a typical mortgage for many banking corporations and tend to be harder to secure as a result. The trouble is, buying a property with the intention of renting, adding on, or even tearing down and starting from scratch comes with greater perceived risks for loan repayment. These investments can sometimes run over budget or experience considerable delays before construction begins or a tenant moves in and begins paying rent. All these negative possibilities can scare away bank investors, but non-banks are often open to working with these kinds of borrowers. Non-banks consider your entire story, not just what you can put down on paper.
Changing your thought process on borrowing money can save you so much time and worry. Simply approaching a non-bank lender that can work without the higher capital requirements that Australian banks are bound to can change the way you buy a home for the better.