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When the bank says no
A bank decline isn’t the end of the road. It usually means your situation doesn’t fit a bank’s box this year. Specialist lenders look at the story behind the numbers.
By Yatin Kainth, Financial Adviser FSP1007497. Last reviewed
Short answer
Specialist lending covers home loans for people who don’t fit standard bank rules: a small deposit, a damaged credit history, income that’s hard to prove, or arrears on an existing mortgage. Non-bank lenders and some banks offer these loans, usually at a higher rate, with a plan to move you back to a mainstream rate once things settle.
Four quick questions. Nothing is saved or sent anywhere.
Answer the four questions to see which options fit.
Buying with 5 to 19% deposit, and what a low equity margin costs.
Low deposit →Defaults, judgments, arrears or a past bankruptcy.
Bad credit →Self-employed with late or lean financials.
Low doc →Behind on payments or facing a mortgagee sale.
Home rescue →| Main bank | Specialist or non-bank lender | |
|---|---|---|
| How they decide | Mostly by scorecard and set policy | A person reads the file and the reasons |
| Interest rate | Lowest available | Higher, often 1 to 4% above bank rates depending on risk |
| Fees | Low, sometimes cashback | Establishment fee is common |
| Typical use | Long-term loan | A bridge of 1 to 3 years, then refinance back to a bank |
The exit plan matters as much as the loan. Before we start I’ll map out what needs to change, such as clean repayments for 12 months or a full year of tax returns, to get you back onto a bank rate.
The non-bank lenders I use are established NZ finance companies. Many are registered with the Reserve Bank and all must follow the Credit Contracts and Consumer Finance Act (CCCFA), which covers responsible lending and fees. Read more in non-bank lenders explained.
Often, yes. Different lenders have very different rules. The key is to apply to the right one first rather than collecting declines, which show on your credit file.
Most people refinance to a bank within one to three years, once the issue that needed specialist lending is behind them.
Usually there’s an establishment fee and sometimes a broker fee for complex cases. I’ll show you every cost in writing before you sign.
Yes. Lenders must follow the CCCFA responsible lending rules, and advisers like me must follow the Financial Markets Conduct Act code of conduct.
Tell me what happened. I’ll be straight about what’s possible now and what needs to change first.
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