PRIVATE LENDING MYTHS | TWELVE GRAINS CAPITAL
We hear a lot of myths about non-bank lenders, almost all of which are untrue. Only because non-traditional lenders take on more risk than the big banks, they’re often misunderstood. We believe that everyone should have an equal chance of being considered for credit.
Non-banks make up a significant part of the home loan market, lending literally billions of dollars of all the mortgages written in Australia.
There are all sorts of reasons a loan application can be rejected but at Twelve Grains Capital we take all aspects of your financial circumstances into consideration, rather than using blanket rules for all borrowers. This ensures we can provide loan options and interest rates suited to the borrower’s circumstances.
We believe that a healthy home loan market needs both the big banks and non-bank lenders like us: a wide range of lenders improves competitiveness, drives innovation and ultimately gives people more options.
We debunk some common myths about this segment of Australia’s home loan and finance system.
Myth #1: Non-Bank Lenders are not trustworthy
Non-bank lenders are trustworthy mortgage providers who help drive competition in Australia’s mortgage market. They offer borrowers an alternative to getting a loan from a bank, which gives people more choice and often a chance they might otherwise not have — of getting into their own home.
Myth #2: Non-Bank Lenders only give loans to people with a bad credit history
Non-conforming borrowers are from all walks of life, including self-employed people, first time buyers and property investors.
Just because an applicant been turned down for a loan by a bank doesn’t have to mean they’re a credit risk. Some borrowers get knocked back simply because they don’t fit the banks usual boxes, like having a credit history, or meeting Lenders Mortgage Insurance (LMI) providers’ criteria.
One example: if you’re self-employed you might not have evidence of cash flow or PAYG statements which can mean your loan application gets rejected by bank lenders.
Myth #3: Non-Bank Loans are expensive
There is rate for risk. Multiple factors can impact upon what creates the interest rate you get offered including market influences, the nature of the product and credit assessment requirements.
Myth #4: Non-Bank Lenders are not financially secure
Non-bank lenders must comply with the same consumer credit rules and regulations as any banks. Loan applications will only be approved if the application satisfies Twelve Grains Capital’s loan suitability criteria and credit assessment requirements, including whether the borrower is able to pay the minimum repayments for the loan.
Myth #5: Non-Bank Lenders have less product options than the banks
Non-banks provide a wide range of finance options. They offer more flexible products than the banks and, because of their unique approach to lending, they tailor loans for borrower’s who do not fit the lending criteria of the banks.
Do you agree with us? Let us know what you think in the comments below.
