#4 Pepper money

Pepper Money is fast. In some instances they will give you an answer within 24-48 hours. So they work well for borrowers who need a quick answer.

Pepper Money also works well for self-employed people. All applications work off only the last six months of income, rather than 2 years (like banks).

They also have an “alternative documentation” option. “Alt doc” means you can apply for loans using non-standard income documents. This means if you earn commission, bonuses, or variable income, it may be easier to get a loan from Pepper Money.

Pepper also considers other loan payments at face value.

Let’s say you have a mortgage that’s fixed on a 5% interest rate. When you go to a normal bank, they will run their numbers as if you’re paying a 9% rate. That’s to see if you could still afford the loan if interest rates spike.

But Pepper doesn’t do that. They’ll run their assessment based on a 5% interest rate (what you’re actually paying). That sounds small but is massive for investors who have a couple of mortgages at different banks.

If you’re paying interest-only on your lending with other banks, they’ll take that into account,

whereas a bank would test all that lending on principal and interest and at a higher interest rate.

Pepper Money charges $1499 for its establishment fee. There is also a $10 monthly administration fee.

#5 Liberty finance

Last on our list is Liberty Finance.

Liberty is an Australian-owned non-bank lender. It’s smaller compared to its competitors.

If you are prepared to take on some higher interest rates, Liberty has options for self-employed borrowers or first-home buyers.

Let’s explain how that works.

For self-employed borrowers, there is the “low doc” (no documents) loan. This means you you don’t need to provide as much proof of your income when you apply.

You can also “self certify” your income. That means you can tell the lender what you earn, without needing to prove it. This makes it a great option for self-employed borrowers, or people who earn income a bit differently.

What’s the catch? The starting interest rate is over 10%. Way higher.

Yes, this is expensive, but after 6 months of making payments the rate drops to the prime rate for good behaviour. So, if you pay all your payments on time, every time, for the first 6 months you get the cheaper interest rate.

First-home buyers can also get approved with only a 10% deposit using Prime Boost. This offers a similar type of loan to Squirrel Launchpad.

This means 80% of your loan term is on their prime rates of 8.59% fixed. But the remaining 10% is on a higher rate, currently 15.49%, which you need to pay off over 7 years.

Again, yes, this is a higher cost, but if you are in a position to get that 10% paid off quickly, it might be worth it to get into your first home.

How is a Non-Bank Lender Different from a Bank?

Banks and non-banks will lend you money to buy a residential property. That could be for you to live or as an investment, but there are key differences.

Non-banks don’t do credit cards, term deposits or other “bank-type” products. They just do home loans.

Because they’re smaller, non-banks have different mortgage structures and interest rates.

Their approach is also different. They take more of a risk-based approach. If you pose more risk, you get charged a higher interest rate.

For a more detailed look at non-banks visit our article: Non-Bank Lender vs Bank – Which One Am I Better Off With?

So which one should I use?

These 5 non-banks are just a sample of the options for home buyers out there.

There are many more, each offering different loan types to suit different situations.

Sometimes getting a more expensive loan is better than getting no loan at all.

The main takeaway here is that there may be genuine options available to you.

A “no” from the bank no longer means “game over”.

So, if you’re self-employed speak to a mortgage broker about whether non-bank might best suit you. If you’re looking for one, you might like to use my team at Opes Mortgages.

A “no” from the bank no longer means game over.

So, if you’re self-employed, a first home buyer, or if you don’t fit the tidy boxes set by the bank – then speak to a mortgage broker about which non-bank might be the best suit for you.

A mortgage broker will advise on which of these lenders best fits your situation, and which products will work for you. If you need a recommendation for a good mortgage broker, check out our list of the top 10 mortgage brokers in New Zealand.