Five things you should know about non-bank lending

Specialist lending, also known as non-bank lending, is made for loans that don’t quite fit the requirements of traditional banks. For this reason, the idea of specialist lending can sound much more daunting than it really is.

So, to help demystify the concept, we’ve compiled the five things you should know about non-bank lending below.

1. What is a ‘non-bank’ lender?

Non-bank lenders are in the business of providing finance, but we’re not banks.

Bank loans are typically funded by other people’s deposits. For this reason, they are heavily regulated under the Credit Contracts and Consumer Finance Act (CCCFA).

While non-bank lenders must still comply with the CCCFA, we are far less regulated than traditional banks. This means we’re able to finance loans traditional banks can’t.

2. When should I use specialist lending?

Specialist lending is for situations needing special attention.

Big banks tend to have a ‘one size fits all’ approach to finance lending. This means that the big banks may decline certain loans, despite the loans making perfect sense.

SCP offers non-bank bridging finance to get your clients from A to B. In other words, we provide short-term, flexible lending solutions to our borrowers that the big banks don’t. All our loans are bespoke, because we believe there’s always a way to make things work.

Once our borrowers have completed their project or overcome their financial gap, they'll usually revert to a traditional bank with a standard extended loan term.

3. How do non-bank lenders fund their loans?

Non-bank lenders typically rely on wholesale funding markets, private investors or other sources to finance their mortgage lending.

SCP is a peer-to-peer lender with two halves to our business: the loans we provide to New Zealanders, and the New Zealanders investing in these loans. Both sides of the business work harmoniously together to help all parties involved achieve financial freedom. You can learn more about the investment side of our business on our Investments page.

4. What are the lending criteria for a specialist lender?

Our aim at SCP is to help as many people as we can through bridging finance. That being said, we do have some guidelines to give you an idea of our lending criteria:

• Loan to value ratio: The LVR is a measure of how much we can lend on a property, compared to the value of that property. While we aren’t bound to limits on our LVRs, as a conservative lender a typical SCP LVR will be up to 60 or 70% depending on the type of loan.
• Loan terms: Typically, our loan terms range from 6 – 24 months.
• Interest rates: We have a risk-based approach when considering a loan. Our loans are flexible, and our interest rates depend on a range of factors – for updated rates check out our website or speak to one of our BDMs.

You can view our lending criteria for different types of properties here.

5. What kinds of properties does SCP lend on?

Our home loans cover the entire spectrum of property purchases, from first-home buyers to property investing and development. We are a small part of the property finance ecosystem, but we play an integral role. In fact, Southern Cross Partners alone helps hundreds of New Zealanders to reach their financial goals every year.

Got a loan for us? Flick us an email at loans@scpartners.co.nz, call us on 09 535 2239, or have a chat with one of our BDMs.

Here are a few things we need from you when you send an application on behalf of your borrower:

• The borrowing entity’s name
• The borrower’s security address
• The funds required
• The purpose of the funds
• The anticipated loan term
• The exit strategy
• The application and borrower background
• The settlement date or requested drawdown date
• Your broker fees

In the application process, we will also need a fully completed Statement of Financial Position, a Sale and Purchase agreement if it's applicable and in some cases, we also require a valuation.

We enjoy hearing from advisers, whether that be to workshop a loan, or learn more about specialist lending. So please don’t hesitate to get in touch with us if you would like to hear more.