Non-Bank Lenders in New Zealand: Are They Right for You?
Exploring alternative lending options in the evolving New Zealand mortgage market
When traditional banks say “no” to your mortgage application, non-bank lenders might just say “yes.” In New Zealand’s evolving financial landscape, non-bank lenders have emerged as a viable alternative for borrowers who don’t fit the conventional lending criteria. But are they the right choice for you?
With struggling home-buyers and owners turning to non-bank lenders in increasing numbers, understanding this alternative lending sector has never been more important for New Zealand property investors and homebuyers.
What Are Non-Bank Lenders?
Non-bank lenders are financial institutions that provide mortgages and loans but don’t operate as traditional banks. Unlike banks, they don’t take deposits from customers, with loans funded by money raised through professional investors rather than customer savings accounts.
In New Zealand, non-bank lenders have grown in popularity, providing tailored loan products that fit various needs, including loans for those with poor credit history or major life events. These lenders fill a crucial gap in the market, serving borrowers who may not meet the strict criteria of traditional banks.
Top Non-Bank Lenders in New Zealand (2025)
The non-bank lending sector in New Zealand includes several established players. Avanti Finance stands out as the second-largest non-bank lender in NZ and won the best non-bank award in New Zealand in 2022 and 2023 at the New Zealand Mortgage Awards.
Other prominent non-bank lenders include Finbase, Pepper Money, SBS Bank, Liberty, and Unity, each offering different specializations and lending criteria to serve diverse borrower needs.
Leading Non-Bank Lenders
These institutions have established themselves as reliable alternatives to traditional banking, each with unique strengths in different lending scenarios.
The Pros and Cons of Non-Bank Lending
Advantages
- Flexible lending criteria: They’re often willing to lend to people who don’t meet traditional bank requirements
- Personalised service: Non-bank mortgage lenders often offer more personalised application reviews
- Alternative when banks say no: May provide loans when traditional banks say no, due to strict lending criteria
- Faster approval processes: Streamlined decision-making without complex banking bureaucracy
- Specialist products: Tailored solutions for unique situations like self-employment or complex income structures
Considerations
- Higher interest rates: They usually charge higher interest rates than traditional banks
- Less familiar institutions: Banks are perceived as more familiar institutions for many borrowers
- Potentially higher fees: Application and ongoing fees may be higher than bank alternatives
- Limited branch network: Often operate primarily online or through brokers
- Funding stability concerns: May be more sensitive to market conditions than traditional banks
Who Should Consider Non-Bank Lenders?
Non-bank lenders are particularly suitable for borrowers in specific situations:
Self-Employed Individuals
Traditional banks often struggle to assess income for self-employed borrowers due to irregular income patterns or complex business structures. Non-bank lenders typically offer more flexible assessment criteria, considering bank statements, accountant letters, and business performance over multiple years.
Those with Credit History Issues
Borrowers with past credit defaults, bankruptcies, or other credit issues may find traditional banks unwilling to lend. Non-bank lenders often take a more holistic view, considering current financial stability and the circumstances behind past credit problems.
Complex Property Situations
Unique properties, investment strategies, or unconventional purchase arrangements that don’t fit standard bank criteria may find approval through non-bank lenders who can offer more bespoke solutions.
Time-Sensitive Transactions
When quick approval is essential, non-bank lenders often provide faster decision-making processes than traditional banks, making them valuable for auction purchases or deadline-driven transactions.
How to Choose the Right Non-Bank Lender
Selecting the right non-bank lender requires careful consideration of several factors:
Interest Rates and Fees
Compare the total cost of borrowing, including interest rates, application fees, ongoing charges, and any exit fees. While rates may be higher than banks, the difference varies significantly between lenders.
Lending Criteria
Each non-bank lender has different criteria and specializations. Some focus on investment properties, others on first-home buyers, and some specialize in complex income situations.
Service and Support
Consider the level of personal service offered. Many non-bank lenders pride themselves on providing more personalized attention than traditional banks.
Reputation and Stability
Research the lender’s track record, financial stability, and customer reviews. Established players with strong market presence generally offer more security.
The Application Process
Applying for a non-bank mortgage typically involves:
Initial Assessment: Most non-bank lenders offer pre-approval services to gauge your borrowing capacity before you start property hunting.
Documentation: While criteria may be more flexible, documentation requirements are often comprehensive. Expect to provide detailed financial information, including bank statements, income verification, and asset details.
Property Valuation: Like traditional banks, non-bank lenders require professional property valuations to assess security for the loan.
Approval and Settlement: Once approved, the settlement process is similar to traditional mortgages, with the lender’s legal team handling the transaction.
Recent Market Developments
The New Zealand non-bank lending sector has seen significant evolution in recent years. Market conditions, regulatory changes, and changing consumer needs have shaped the landscape, with struggling home-buyers and owners turning to non-bank lenders as traditional banks tighten their lending criteria.
Ready to Explore Your Options?
Whether you’re a first-home buyer, property investor, or someone who’s been declined by traditional banks, non-bank lenders might offer the solution you need.
Get Expert Advice TodayConclusion
Non-bank lenders represent a valuable segment of New Zealand’s mortgage market, offering solutions for borrowers who don’t fit traditional banking criteria. While they typically come with higher costs, the flexibility, personalized service, and accessibility they provide can make them the right choice for many Kiwi borrowers.
The key to success with non-bank lending is understanding your specific needs, comparing options carefully, and working with experienced professionals who can guide you through the process. As the New Zealand property market continues to evolve, non-bank lenders are likely to play an increasingly important role in helping Kiwis achieve their homeownership and investment goals.
