Non-Bank Lenders

Australia’s mortgage market is evolving rapidly, offering borrowers more choices than ever before. Non-bank lenders, once considered niche players, are now providing flexible and competitive solutions that challenge traditional banks.

Whether you’ve had trouble securing a home loan with a major bank or are just exploring alternatives, non-bank lenders might be a great option. They provide personalised service and flexible loans tailored to different needs.

This guide will walk you through everything you need to know about non-bank lenders, their advantages, drawbacks, and important considerations before making a decision.

Looking To Compare Non-Bank Lenders?

At Home Loan Experts, we specialise in connecting you with non-bank lenders who can offer competitive rates, personalised service, and flexible approval criteria.

Whether major banks have turned you away or you’re simply looking for a better deal, our mortgage experts are here to help.

Call us at 1300 889 743 for a free, no-obligation consultation or complete our free online assessment form, and we’ll match you with the right lenders for your needs.

What Is A Non-Bank Lender?

A non-bank lender is a financial institution that does not have an authorised deposit-taking institution (ADI) licence.

They perform most of the functions a traditional bank would, but are not able to take deposits from their customers.

However, they do offer products like home loans, car loans, and even credit cards at competitive interest rates compared to bigger banks.

What Are The Non-Bank Lenders In Australia?

Here is a list of non-bank lenders in Australia, some of which are also on our panel of lenders.

• Athena Home Loans
• Australian First Mortgage Bank
• Bank of Sydney
• Better Mortgage Management
• Beyond Bank
• Bluestone Mortgages
• ChoiceLend
• Click Loans
• Connective
• Firstmac
• Fox Symes
• Freedom Lend
• Hodgestone Finance
• Homeloans Ltd
• Homestar Finance
• Kogan Money
• La Trobe
• Liberty Financial
• loans.com.au
• Ma Money (formerly MKM Capital)
• Mortgage Ezy
• Mortgage House
• National Mortgage Company (NMC)
• Newcastle Permanent
• Pepper Money
• Rabobank
• RAMS
• Reduce Home Loans
• RedZed
• Resimac
• State Custodians
• Suncorp Bank
• Tiimely Home (formerly Tic:toc)
• Victorian Mortgage Group (VMG) Home Loans
• Virgin Money
• Well Home Loans

What Are The Types Of Home Loans Non-Bank Lenders Offer?

Most non-banks are specialist lenders who have been known to lend to riskier borrowers.

Some of the types of home loans offered by non-banks are:

• Basic home loans with either a fixed or variable rate with limited features. Some offer split-rate home loans as well.
• Some even offer full-featured standard home loans with the added benefits of offset accounts, redraw facilities, ability to make extra repayments, etc.
• Low doc loans
• Bad credit home loans
• Investment loans
• Construction loans

Are Non-Bank Lenders Safe?

Due to the absence of a banking licence, many make the misconception that non-banks are not safe. Furthermore, non-banks are last resort for getting their home loans approved.

However, non-banks are just as safe as traditional banks.

Since they cannot take on any deposits, you are not actually keeping any of your money with them. You are just repaying them for the loans.

Since the Australian Securities and Investments Commission (ASIC) regulates them, they still must follow the directives in the National Consumer Credit Protection Act (NCCP).

The NCCP Act protects consumers and ensures that ethical and professional standards are maintained and upheld in the finance industry.

Furthermore, non-banks are also bound by Australian consumer law and privacy Law and ePayments code.

What Are The Advantages Of Using A Non-Bank Lender?

There are several advantages of using a non-bank lender over a traditional bank:

• They are specialist lenders that can help higher-risk borrowers who were rejected by major banks for reasons like their credit history or employment status.
• They have more lenient methods for assessing existing and new debt since the Australian Prudential Regulation Agency (APRA) does not regulate them.
• They can provide more flexible loan terms and repayment schedules.
• They can offer competitive and sometimes even cheaper interest rates than traditional banks as they borrow funds at wholesale rates and have lower operational costs compared to large banks.
• They offer lower setup fees and ongoing fees than traditional banks.
• They can generally approve loans and settle funds more quickly as they don’t have a large hierarchical structure like traditional banks./li>
• They offer a much more personalised service than a traditional bank.

What Are The Drawbacks Of Using A Non-Bank Lender?

While non-bank lenders offer competitive interest rates, there are some downsides to choosing them over a traditional bank:

• They cannot offer the full range of banking products, such as savings or checking accounts, and may also lack popular features like offset accounts.
• They may offer competitive rates, but they can charge higher interest on riskier borrowers.
• They have a limited physical presence and fewer branches. Most of their services are offered online.
• They have fewer loan product options.
• They’re not as good as the big banks for financing unusual securities.
• They’re not as good for temporary employee and casual employee home loans.

Should I Use A Non-Bank Lender?

Due to the aggressive interest rates of non-banks, it may seem like a no-brainer to choose a non-bank lender for your home loan.

They offer flexible interest rates and lower fees on their home loan products. Furthermore, traditional banks have been forced to respond to their fierce competition by lowering their interest rates as well.

However, interest rates are one of the many facets you should look into when choosing a lender.

You also have to take into consideration the following points before choosing a non-bank lender:

• Fees and rates like establishment fees, application fees, monthly and annual fees, offset and redraw fees.
• If there are any hidden costs like break costs.
• Provision of a free redraw.
• The length of their application process.
• The customer service they offer.
• Criteria for application.
• Online banking facility.

Ready to find the right non-bank lender? Our home loan experts work closely with many of these providers to help you find competitive rates and loan features, all tailored to your personal financial goals. Call us at 1300 889 743 or complete our free online assessment form to get started.