Pros and Cons of Non Bank Lenders in NZ (Is it Right for You?)
Non-bank lenders can help when the bank says no—but they’re not always the right fit. This guide walks through the pros and cons of non bank lenders NZ borrowers should weigh up so you can make a confident, informed decision.
What Are Non Bank Lenders and How Do They Operate in NZ?
Non-bank lenders are specialist finance companies (not deposit-taking banks), that still follow responsible lending rules. They assess applications case-by-case and consider alt-doc income, recent credit repair, or non-standard situations. For the full explainer, see our non bank lending in NZ.
The Pros – When Non Bank Makes Sense
Flexible assessment for real-word situations
Specialists look at the full picture, not just one score. They’ll consider improving credit, alt-doc income (e.g., GST returns or business statements), boarder/flatmate income and other context a bank may overlook.
Where this often helps:
Self-employed with less than two years of financials.
Outcome: Access to lending today, with a plan to become bank-ready over the next year or two.
Cash-flow friendly structures
Some products allow interest-only for a short period, short-term bridging, or rental-aware structuring. These can smooth cash-flow while income stabilises – provided there’s a clear review or exit point.
Faster, pragmatic decisions
Smaller teams focused on mortgages can issue decisions quickly which are helpful for auctions, deadline sales, or short finance clauses. Some lenders offer rate locks that hold today’s fixed rate for approximately 30-60 days while you finalise documents.
A stepping-stone back to bank rates
For many, non-bank is part of a plan: To buy or refinance now, then tidy credit/financials, then refinance to bank pricing once he criteria are met.
The Cons: Costs and Trade-Offs to Consider
Higher Pricing Than Banks
Rates and some fees are typically higher because lenders take on more complexity or risk. Compare the total 12-24 month cost (interest plus all fees), not just the headline rate.
Fees and possible exit charges
Establishment/broker/admin fees may apply: some loans include early-repayment or discharge costs (others don’t). If cash-flow is tight, fees are sometimes added to the loan-but that increases interest paid.
Shorter term or review points
Many products are meant as temporary solutions until you’re bank-ready. You’ll need a realistic refinance plan and timeline.
What It Really Costs (simple sense-check)
Before you commit, your adviser will model:
Non bank now: total interest and all fees for the expected term.
Bank later: cost if you wait, including the risk of missing a purchase.
A clear, numbers-first view keeps decisions practical.
When to Choose Non Bank vs Wait for Bank Option
Choose non-bank now if:
You’re close to bank criteria but timing matters (auction/deadline sale).
Income/credit will be bank-ready soon, and a 12–24 month plan makes sense.
Cash-flow works today with an interim structure you can afford.
Consider waiting for bank if:
You’re several steps away on servicing/credit and there’s no time pressure.
The extra cost outweighs the benefit of buying or restructuring now.
Quick Checklist to Help You Decide
Fit today? PAYE and clean credit and low debt – likely bank. Need alt-doc, have credit blips or complex income? Consider alternative lenders first.
Money maths: Compare alternative lends now (12-24 months’ total cost) vs go to bank later.
Exit plan: List the 2-3 tasks you need to get bank ready (e.g. wait for full financials, reduce card limits, wait for rent to go into your account) and set a target date.
Budget check: Can you afford repayments at a higher test rate than today’s pricing?
Adviser check: Talk to an alternative lender specialist who will give you a side-by-side quote and refinance timeline.
We’re Here to Help
See how Platinum Mortgages’ non bank lending servicesworks, start to finish, since they play a vital role in helping property buyers with non-traditional income or recent credit repair. We’ll model bank today vs non bank today vs bank-ready later, then manage the application and structure so cash-flow works, without surprises.
Contact usfor a no-obligation chat about your situation.
★ We Are Trusted
Angela is an accredited Financial Adviser, licensed under FSP742251 and has been in the Financial Industry since 2006. Our 5-star Google reviews reflect the excellent customer experience we promise — making your home loan journey positive, stress-free, and rewarding. At Platinum Mortgages, our clients are the reason we exist — so you can be confident every step is guided by genuine care and expertise.
