What can I do if the banks won’t approve my client’s loan application?

As the economy changes and new regulations begin to be introduced, the landscape is changing for mortgage advisors. Cam Harper, managing partner of Southern Cross Partners, breaks down how to navigate these changes. 

You’ll know there are some types of loan applications that make sense but the banks don’t like lending on them - it might be someone who contracts and hasn’t had debt to pay off in the past, they’ve owned a small business for less than 2 years or someone who is earning income offshore.

 The other common scenario is someone wanting to extend their property portfolio and they need bridging finance

 Whatever the situation, we’re hearing more and more that the banks are being pickier with what they lend on. 

 So, what do you do when the banks say no? Give up on the application? 

 You’ve already ploughed plenty of time into shaping up your client’s application and giving up on them now is a waste of your time and you are going to miss out on commission. That’s where non-bank lending can be a valuable alternative. 

 Non-bank lending, as the name implies, is when a loan is obtained from an institution or organisation other than a bank. 

 Non-bank lending is a lot more flexible when it comes to lending, but we still have rigorous processes when it comes to assessing an application. At Southern Cross Partners, for example, we do plenty of bridging loans to help people. We look at the borrower holistically and assess each deal on its merit rather than ticking boxes. The adage of “How do we say yes as opposed to how do we say no?” rings true.

 A bridging loan is a short-term home loan, often used to provide homeowners with the finances to purchase a new property before selling their current one. While this might seem risky to a bank, non-bank lending can make it easier for people to achieve their real estate goals. 

 These loans are often passed on to banks at a later stage as a traditional mortgage. This is because buyers interested in bridging loans are seen as a greater risk to lenders due to being unable to provide a definitive date when their property will be sold - and so unable to say when the loan will be repaid in full. 

 The real benefit of leveraging non-bank lending is that as a broker you are going to get two bites of the cherry. You’ll get a fee when you place them with a non-bank lender and then a year later, you’ll commission from the bank you move them to. 

 If you’re interested in a bridging loan for your client’s property goals, get in touch with the team at Southern Cross Partners.