A Non-Bank Gamechanger

Disrupting Finance: The Non-Bank Revolution

I answered the phone last week with an excitable business development manager of a non-bank lender on the other end who knew that we deal a lot with property investors and who wanted to let us know their latest mortgage updates. This isn’t an uncommon occurrence and so I wasn’t expecting much but for the first time since the property downturn hit in 2022 a funder has come out targeting property investors with some very aggressive changes.

For some investors who have been locked out they are a true gamechanger.

Firstly, while the banks are limited to requiring a 30% deposit on an existing investment property this funder will lend up to 90%.

So let’s say you have access to $100k cash or usable equity If you were targeting existing properties which we are finding more common these days as investors go back to old fashioned investing (buy at a discount and add value through renovations).

With the banks based on that deposit you are limited to being able to purchase to a $333k property or basically locked out of the property market if looking at existing properties. With this new lender you may be able to purchase up to $1m.

Note the costs are higher but, in many cases, if you can buy well there can be a planned two stage process to buy through them before getting back to a bank over time.

Secondly, they are far, far, far easier to assess loan affordability. There are no debt-to-income formulas to worry about or high test rates. In fact, they test your existing debt based on your actual payments (this is massively different from how the banks do this). On top of this, they are taking 80% of rents into consideration and may take some income sources into account that the banks won’t.

Choose the best lending option for property investment

Now if you have no issues at all with deposit size or meeting a banks affordability requirements we will always point you there as this will be the cheapest most cost effective option for you but if you can’t come have a chat with us to see what other options are now coming available.

Just contact us at info@krispedersen.co.nz or call the office at (09)4864719, and we can discuss what you want to achieve from there.

About the author: Kris Pedersen is a leading figure in mortgage advising and property investment, consistently ranked among the country's top six mortgage advisers for the past four years. With over a decade of experience, Kris is the preferred choice for investors seeking expert guidance to expand their portfolios. He shares his insights as a respected speaker at Property Investor Association groups, and his expertise extends to New Zealand and overseas property and finance markets, with regular features in NZ Property Investor Magazine. Kris Pedersen and Kris Pedersen Mortgages Limited are registered financial service providers, ensuring transparency and reliability in all financial dealings. Their credentials on the Financial Service Providers Register can be viewed here: https://fsp-register.companiesoffice.govt.nz/