A non bank lender can create a pathway when a bank’s policy does not fit. This flexibility may come with higher interest rates, added fees, shorter terms or greater exit-plan risk.
The right decision is not simply bank versus non bank. It is whether acting now creates enough value to justify the total cost, conditions and risk
This page focuses on the benefits and disadvantages of non bank mortgage lending in New Zealand. For a full explanation of how the market works, read the Non Bank Lending Guide.
For personal lender advice, use the Non Bank Lending service page.
A sound decision compares the available bank, specialist and wait-or-strengthen pathways. The choice should be based on the borrower’s total cost, risk and expected outcome, not on approval alone.
| Potential benefit | Related trade-off |
|---|---|
| More flexible treatment of acceptable income evidence | Pricing and fees may be higher. |
| Manual assessment of a complex but explainable situation | More documents, conditions or monitoring may apply. |
| A solution for an unusual property or timing problem | A short-term facility or delayed exit can increase the cost. |
| A possible stepping stone while the borrower becomes bank-ready | Returning to a bank is not guaranteed. |
Some specialist lenders assess the complete circumstances rather than relying only on one standard rule. This can help where income is self-employed, variable or supported by alternative evidence, or where a past credit event has a clear explanation and recent conduct is strong.
Platinum Mortgages can present suitable applications directly to relevant lender decision-makers, helping ensure the borrower’s circumstances, supporting evidence and explanation are properly understood.
A specialist lender may have criteria designed for a borrower, property or loan purpose that sits outside a main bank’s standard model. Non bank products are not all the same. Some are longer-term near-prime home loans, while others are shorter-term or designed for more complex or higher-risk situations.
Depending on the lender and purpose, options may include a short-term facility, bridging finance, interest-only for an agreed period or a structure that reflects rental or business cash flow. The structure must still be affordable and connected to a clear review or exit point.
A specialist team may sometimes assess a complete application more quickly than a large bank process. This can matter for a settlement or finance deadline, but speed should not be promised and should never replace proper due diligence, valuation, legal work or affordability checks.
A borrower may use a specialist facility while completing financial accounts, demonstrating cleaner recent credit conduct, reducing debt or increasing equity. The benefit exists only when the milestones and expected holding period are realistic.
Interest rates and lender fees may be higher than mainstream bank pricing, and adviser fees may also apply. Compare the total cost over the expected term, not just the initial repayment or advertised rate.
A facility may include lender establishment or administration fees, valuation costs, legal fees, adviser fees and discharge or early-repayment costs. Adding fees to the loan can also increase the interest paid.
Some products are designed for a shorter period and may require regular information, property milestones, a sale or a refinance by an agreed date. A delayed exit can materially change the cost and risk.
Depending on the lender and facility, specialist or private lending may involve additional security, guarantees or stricter default conditions. The borrower should understand exactly what property is at risk and obtain independent legal advice where appropriate.
Future bank approval depends on the bank’s policy and the borrower’s position at that time. A non bank loan should not be accepted on the assumption that refinancing will definitely happen.
The additional flexibility may justify the higher cost where:
This may be a more suitable option when:
Angela Downie, Financial Adviser, Platinum Mortgages explains:
“One situation where I advise clients not to use a non-bank lender is when I genuinely believe they’ll be in a much stronger position with a main bank if they’re prepared to wait a little longer. Sometimes the quickest solution isn’t the best long-term solution.
I recently worked with a client whose application had been declined because of recent unarranged overdrafts. Rather than rushing into specialist lending, we spent several months improving their account conduct and preparing a stronger application. They were later approved by a main bank and ultimately achieved a better long-term outcome.
That’s why I’ll never recommend specialist lending simply because it’s available. If I believe waiting will produce a better long-term result, I’ll always have that conversation.”
Compare at least three pathways: another mainstream bank now, a non bank lender now, and waiting until the application is stronger. For each option, record the interest, lender and adviser fees, valuation and legal costs, likely holding period, exit costs and the financial consequence of waiting or missing the transaction.
The cheapest headline rate is not always the best overall outcome, and the fastest approval is not always the safest. Compare the total dollars paid and the consequences if the planned exit is six months late.
Angela Downie says:
“ One factor that can matter just as much as the interest rate when comparing lenders is the loan structure.
A lower interest rate isn’t always the best outcome if the loan isn’t structured to suit the client’s circumstances and long-term goals.
Depending on the situation, that might mean principal and interest repayments, interest-only repayments, capitalised interest ( where interest is added to the loan balance rather than paid as it falls due), or a combination of these options.
The right structure can provide flexibility where it is appropriate. This is why I focus on the solution that best supports the client’s overall strategy rather than simply chasing the lowest advertised interest rate.”
| Situation | What to examine |
|---|---|
| Self-employed with one year of strong trading | Quality of alternative evidence, deposit, affordability, extra cost and when full accounts will be ready. |
| Older paid default with clean recent conduct | Age and cause of the event, current statements, bank options, specialist pricing and realistic credit milestones. |
| Unusual property or short settlement | Whether another bank fits, valuation and legal timing, the value of the transaction and the cost if the exit is delayed. |
| High debt and tight servicing | Whether reducing debt or limits, lowering the loan or waiting is safer than paying specialist pricing. |
Before deciding whether to proceed, check that:
If you want help applying these trade-offs to your own circumstances, visit our Non Bank Lending service page to see how Platinum Mortgages assesses lender pathways, costs and risks before recommending a way forward.
Platinum Mortgages New Zealand Limited (FSP752271) is a licensed Financial Advice Provider. Angela Downie (FSP742251) is a registered Financial Adviser with mortgage-industry experience since 2006.
Angela’s specialist lending expertise has received multiple industry awards and recognitions.
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