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Who are these non-bank lenders and are they financially secure?

Posted: Fri Jun 14, 2019 12:29 pm
by Lin
Hi, I’m currently in Singapore working as a petroleum engineer. I’m looking to add a second property to my investment portfolio. The first property was mortgaged with Westpac before I left home five years ago. Now, my bank’s telling me only they’ll only be using 60%-80% of my income and they’ll not take into account any negative gearing benefits. So, I’m looking at non-bank lenders. Are non-bank lenders financially secure? Can you also give me the name of these lenders so I can research these lenders?

Re: Who are these non-bank lenders and are they financially secure?

Posted: Fri Jun 14, 2019 2:07 pm
by Otto Dargan
Hello Lin. Welcome to the forums.

Yes, non-bank lenders are generally financially secure. If you are a borrower it isn't a major concern anyway. They are lending you money, you’re not putting a deposit with them. So in the worst case scenario, if they do face financial hardship you can simply refinance your mortgage with another lender.

There's more than one type of non-bank lender:
  • Non-bank lenders similar to a mainstream lender e.g. Firstmac is a major non-bank lender that wholesale funds other non-bank lenders.
  • They're actually a major bank e.g. Rams and Advantedge are both owned by prime lenders such as Westpac and NAB respectively.
  • Specialist lenders e.g. Pepper/ Liberty / RedZed / Bluestone / La Trobe / MKM / Prime Capital, VMG and many others.
  • Private lender e.g. Mango credit, DJ Capital etc.
We specialise in Australian expat mortgages.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for an expat home loan.

Cheers,

Re: Who are these non-bank lenders and are they financially secure?

Posted: Fri Jun 14, 2019 3:03 pm
by Lin
Thanks for the information. I’ve heard of some of these lenders before. So, will these non-bank lenders accept 100% of my foreign PAYG income? And how much of the rental income can be used in serviceability?

Re: Who are these non-bank lenders and are they financially secure?

Posted: Fri Jun 14, 2019 3:46 pm
by Otto Dargan
Hi Lin,

When calculating theborrowing power of an expat most lenders will typically only use between 60% and 90% of your foreign income to account for exchange rate fluctuations, foreign tax rates, negative gearing benefits and repayments on your foreign debts. It tends to vary between lenders significantly.

Most lenders will also use:
  • Australian tax rates even if you’re living in a country without an income tax.
  • No negative gearing benefits.
  • Lenders will typically add a buffer rate on top of your foreign debt to allow for interest rate fluctuations.
Typically, lenders will take 80% of the rental income from your existing property and the new property for serviceability. The reason they only use 80% is to account for the cost of property maintenance, repairs and management of the property.

Cheers,

Re: Who are these non-bank lenders and are they financially secure?

Posted: Fri Jun 14, 2019 5:08 pm
by Lin
Okay. Are non-bank lenders more expensive? That is to say, compared to banks.

Re: Who are these non-bank lenders and are they financially secure?

Posted: Fri Jun 14, 2019 5:44 pm
by Otto Dargan
Hi Lin,

That depends on the type of home loan you’re getting. Typically, for bad credit and low doc loans, yes, they tend to be more expensive. For standard home loans and expat home loans, they are usually the same price or in some cases, a little cheaper than the banks.

Non-bank lenders are ideal for borrowers who’re slightly outside normal lending criteria including expats and need a common sense approach to lending. The interest rates and lender policy change all the time, so it’s best to contact us.

Speak with one of our specialist mortgage brokers by giving us a call on 1300 889 743 or by filling in our free assessment form to find out if you qualify for an expat home loan.

Cheers,