What are Your Options When the Bank Says No?

Getting rejected for a bank loan can feel like hitting a dead end, especially when you need financing for an important life goal, like buying a property.

But a "no" from traditional banks doesn't mean you're out of options.

In this week’s update, we’ll take a look under the hood of Non-Bank lenders. These alternative lenders can provide viable solutions when traditional banking options fall short. We'll show you some common scenarios where Non-Bank lenders can help and how to potentially transition back to a traditional bank in the future. 

Common Scenarios Where Non-Bank Lenders Can Help

We frequently encounter various situations where Non-Bank lenders can provide viable solutions. Let's explore some of the most common scenarios where these alternative lenders step in to help.

1). Self-employed: Self Employed individuals often face unique challenges when seeking financing. Banks want lots of paperwork, but Non-Bank lenders keep things simple. They offer low-doc and alt-doc options accepting as little as 6 months of business bank statements for self-employed applicants. This flexibility makes it significantly easier for business owners and contractors to access funds.

Here are some key situations where Non-Bank lenders can help:

• Poor credit history or previous defaults
• Self-employed with limited documentation
• Non-traditional or overseas income sources
• Short-term bridging finance needs
• Property development projects

2). Credit Challenges: For those with credit challenges, we've seen that Non-Bank lenders take a more holistic approach to assessment. Rather than simply declining applications based on credit scores, they work to understand the story behind past financial difficulties. This means even if you've had previous credit issues, you might still qualify for a loan. What's particularly noteworthy is the flexibility offered around income verification. Non-Bank lenders can accept alternative documentation for this, which is especially beneficial for:

• Commission-based contractors
• Seasonal workers
• Small business operators
• Those with multiple income streams

While interest rates may be higher than traditional bank rates, Non-Bank lenders often provide more negotiable terms for borrowers with good credit history. This means if your only barrier to bank lending is unconventional income or documentation, you might secure competitive rates while benefiting from more flexible lending criteria.

Working with a Mortgage Adviser can be invaluable when navigating Non-Bank options. We have relationships with multiple lenders and can help match you with the most suitable option based on your specific circumstances. 

Creating Your Path Back to Main Bank Lending

While working with Non-Bank lenders provides immediate financing solutions, we understand that many clients aim to eventually transition back to traditional bank lending. Our experience shows that with proper planning, many borrowers can successfully refinance back to a mainstream bank within 24-36 months.

Building Your Bank-Ready Profile: The first step is organising your documentation properly. Banks require comprehensive financial records, including:

• Three months of bank statements 
• Recent payslips or the last two years of business financials
• Evidence of assets and liabilities
• Proof of regular bill payments

Maintaining a clean credit record is really important during this transition period. Making consistent payments on your current Non-Bank loan demonstrates reliability to future lenders. It's also important to note that multiple credit applications can negatively impact your credit rating, so we recommend working with a Mortgage Adviser who can strategically time your refinancing application back to a mainstream bank.

Conclusion

Non-Bank lenders become valuable partners in your financial experience when traditional banks don't fit your needs.

These alternative lenders fill significant gaps in the market, especially when you have self-employment or unique financial situations. 

Though interest rates might be higher than traditional bank offerings, Non-Bank lenders provide essential stepping stones toward your financial goals. Many clients successfully transition back to traditional banks within two to three years through careful financial management and consistent payment history.

Success with Non-Bank lending comes down to choosing the right lender and maintaining strong financial habits.

Remember, a "no" from a traditional bank doesn't mean the end of your borrowing journey.

With the right approach and guidance, Non-Bank lenders can help you achieve your immediate financial needs while building stronger banking relationships over time. We understand these decisions can seem complex, so feel free to reach out if you need a hand navigating your options.

Cheers, Simon 📲 021 322 109