We debunk some common myths about this segment of Australia’s home loan and finance system.
Busted: Non-bank lenders are perfectly trustworthy home loan providers who help drive competition in Australia’s mortgage market. They offer borrowers an alternative to getting a loan from a bank, which gives people more choice and often a chance they might otherwise not have - of getting into their own home.
Non-banks make up a growing part (around 7%) of the $1.7 trillion Australian home loan market, lending literally billions of dollars annually of all the home loan written in Australia1.
Busted: Non-conforming borrowers are from all walks of life, including self-employed people, first time buyers and property investors. In fact over 25% of our loans are made to what you would describe as bank prime customers – and they come to us for better service.
Just because an applicant been turned down for a loan by a bank doesn’t have to mean they’re a credit risk. Some borrowers get knocked back simply because they don’t fit the banks usual boxes, like having a credit history, or meeting Lenders Mortgage Insurance (LMI) – insurance for the lender usually above 80% of the valuation but paid for by the borrower - providers’ criteria. One example: if you’re self-employed you might not have evidence of cash flow or PAYG statements which can mean your loan application gets rejected by bank lenders. There are all sorts of reasons a loan application can be rejected but at La Trobe Financial we take all aspects of your financial circumstances into consideration, rather than using blanket rules for all borrowers.
Busted: You can see some of the loans offered by non-bank lenders are advertised at competitive interest rates; they wouldn't survive if they weren't competitive. Multiple factors can impact upon what creates the interest rate you get offered including market influences, the nature of the product and credit assessment requirements.
At La Trobe Financial, every home loan application is individually assessed based on its own merits, with the assessment carried out by a real person, not a computer – even with loans for people who have been discharged from bankruptcy or other non-conforming loans. This ensures we can provide the right loan options for the borrower’s circumstances at interest rates that are competitive to that situation.
Busted: The non-bank sector has undergone significant changes in the years following the global financial crisis.
Non-bank lenders must comply with the same consumer credit rules and regulations as any banks. Loan applications will only be approved if the application satisfies La Trobe Financial’s loan suitability criteria and credit assessment requirements, including whether the borrower is able to pay the minimum repayments for the loan. Read more about La Trobe Financial’s responsible lending (link)
Plus we are actually funded by some of Australia’s leading financial institutions so you can rest easy knowing that we can support your loan with us.
Busted: Non-banks like La Trobe Financial often provide a wide range of finance options. They offer more flexible products than the banks and, because of their unique approach to lending, they tailor loans for borrower’s who do not fit the lending criteria of the banks.
At La Trobe Financial, our home loans are available for all sorts of borrowers, from those with full documentation to those working with alternative documentation/ verification of their income. That's because our approach looks at all aspects of a person's financial circumstances and credit requirements and our credit analysts are happy to help someone find the right loan for their situation.
We believe that a healthy home loan market needs both the big banks and non-bank lenders like us: a wide range of lenders improves competitiveness, drives innovation and ultimately gives people more options.
1. Housing Finance, Australia, September 2017, Australian Bureau of Statistics