Thinking about your first home or an investment, but hitting a brick wall with the bank? Non bank lenders can be a practical pathway – not a last resort – especially when your situation is a little outside the box. We discuss four clear advantages of this pathway, when they typically apply, and how to use them well in New Zealand.
For a balanced view that covers drawbacks too, see our Pros and Cons of Non Bank Lenders. This page focuses on advantages only.
1. Flexible Criteria for Real-World Income and Credit Histories
Banks often need full, tidy financials and long proof trails. Specialist lenders assess the broader story which includes income trends, explanations for past credit hiccups, and how your budget actually works now.
Where this helps in NZ:
- Self-employed or contractors with less than 2 years’ accounts or variable cashflow.
- Credit repairs are underway (e.g. a paid default or discharged bankruptcy).
- Strong income but unusual paperwork (use of boarders, flatmates, multiple casual roles, new business with projections).
Mini-scenario: You’ve traded for 12 months with solid invoices but limited financial accounts. A specialist lender uses alt-doc (e.g. GST returns or business statements) to evidence income and structure a loan you can afford – while you finish the paperwork the banks want.
Next step: Pull together a simple pack – Photo Id, proof of income (alt-doc) is fine, a list of debts and card limits, and your last 90 days of statements. A specialist lending specialist can show you which lenders will fit and what to tidy for a bank ready move later.
2. Faster, More Pragmatic Approval Processes
Alternative lenders move quickly because their teams are set up for case-by-case decisions. That speed can win a home in a competitive market or unlock time-sensitive opportunities.
Where this helps in NZ
- Auction or deadline sales with short finance clauses.
- Time-bound scenarios (fixed-term employment, rates coming up for review)
- Clean but non-standard applications that would sit in a bank queue.
Mini-scenario: You’ve found the right townhouse with a 10-day finance clause. A alternative lender issues conditional approval in less than 48 hours (often much faster), letting you proceed confidently while we refine documents.
Tip: Speed doesn’t mean skipping checks – you’ll still need affordability at the lender’s test rates, and clear evidence you can service the loan.
3. Innovative Structures That Match Cash-Flow and Timing
Because they focus on mortgages rather than every retail product, non traditional banks often offer options that help you bridge from “nearly there” to “there”.
Common NZ examples:
- Interest-only for a defined period to manage cash-flow while income stabilises.
- Bridging finance when selling and buying don’t line up neatly.
- Home-and-income/ rental shaving policies that reflect true rental flows.
Mini-scenario: an investor plans light renovations to ultimately increase rent and value. A non traditional bank uses interest-only on the investment split for 12-24 months. Once rent and valuation improve, we refinance back to a mainstream bank on sharper rates.
Guardrail: Structures should have a clear exit or review point. Your adviser should map how and when you’ll transition, not just the day-one numbers.
4. A Practical pathway Back to Bank Rates
A major advantage is strategic: alternative to bank lenders can act as an interim measure while you fix the reasons a bank said no – e.g.: complete two years of financials, rebuilt credit, reduce short-term debt, or allow time for 3-6 months of rent payments come into your bank statement, so that mainstream lenders can include more of it in their servicing assessment.
How we plan it:
- Secure a workable alternative to bank approval today.
- Set a 12-24 month plan to tidy credit, finalise accounts, and build equity.
- Review at set checkpoints – and then refinance to a bank when criteria are met.
Mini-scenario: A couple with a recent default (now paid) gets a short-term alternative bank loan with clear milestones. Twelve months later, their credit is clean, income is stable, and the loan refinances to a bank- dropping the rate.
When This Path Isn’t Right
If the numbers don’t work at today’s test rates, or fees or terms outweigh the benefit of getting in sooner, a bank first strategy may be better. For a balanced view (rates, fees, exit costs), read our Non Bank Lenders: Pros and Cons and then compare your situation.
How to Get Started
- Confirm income sources (salary, self-employed, rental/boarders).
- Lists debts and card limits – consider trimming unused limits
- Set a target purchase price or refinance goals.
- Bring 90 days statements (personal and business if relevant)
- Ask a non bank lending adviser to model today vs bank-ready later, so you can weigh cost vs speed.
Ask a non bank lending adviser to model today vs bank-ready later, so you can weight cost vs speed. See more about our non bank lending services and how we can help get you approved.
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