Self employed or have irregular income?

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Self employed or have irregular income? Here’s how you could still get your home loan application approved.

Traditional lenders like traditional income. But in real life, people earn money in different ways: from the self-employed, shift work, casual work, and more. You’ve got a subset of Kiwis who are very successful on their own merits, but they could be shut out of ‘prime’ or ‘bank’ loans simply because they don’t fit the credit criteria.

Broadly speaking, there are some key reasons that a borrower may not meet the lending requirements set out by banks or ‘traditional’ lenders. For some borrowers it may be a case of not meeting the credit scoring requirements; for others it may be down to an impaired credit report; or, for some, it may be because they cannot provide the traditional income verification documents required by mainstream lenders.

Specialist loans are therefore, as the name suggests, designed to provide special financial options for borrowers who are unable to meet the requirements of traditional lenders for a wide range of reasons.

Non-bank lenders are in the business of providing these real-life solutions – particularly in the specialist lending category. They generally offer a range of flexible options for the growing number of customers who may be finding it difficult securing a loan through the banks, and other traditional lenders.

Instead of using algorithms non-bank lenders take a more flexible, human approach that allows them to assess home loan applications individually as part of their responsible lending assessment. Non-bank specialist loans are suitable for all sorts of people from blue chip to blue collar, to help customers achieve their goals – particularly when they may seem out of reach.

Non-bank lenders have been around for a long time, and intimately understand the needs of the self-employed and specialist borrowers that typically need flexibility, transparency, and a quick response as well as completing responsible lending checks and considering a borrower’s individual circumstances.

Demand for specialist lending options is growing quickly – more so than ever. More Kiwis are seeking the assistance of non-bank specialist lenders – from the growing self-employed market to people with different types of income, those recovering after a life event or building a property profile; the need for alternative and specialist lending is likely to continue to grow and build momentum.

Non-bank lender Pepper Money has years of research and experience to show that borrowers are looking for someone to take the time to understand their circumstances and demonstrate that they genuinely want to help them succeed. Financial advisors are uniquely placed to offer a broad range of options for borrowers – so it could be worthwhile having one in your corner.

Your financial adviser may be able to give you some non-bank specialist lending options to consider – particularly because these lenders look at a customer’s wider circumstances to see if the borrower is in a position to service a loan and meeting responsible lending requirements. Looking at customers circumstances on a case-by-case basis means they could lend to borrowers in circumstances that may not meet other lenders criteria. They don’t let the type of employment, past, or ‘rough times’ automatically define the customer’s future.

Three features of a non-bank loan that might appeal to you

  1. Flexible Eligibility Criteria: Non-bank lenders often have more flexible eligibility requirements compared to traditional banks. They will take into account your individual circumstances, such as your credit history, employment status, and various income sources, which could make it easier for borrowers with less-than-perfect credit or non-traditional income streams to obtain a loan.
  2. Tailored Lending Solutions: Non-bank lenders specialise in niche lending areas, catering to specific borrower needs. They may offer a wide range of loan products, including mortgage finance, property development finance, business loans, asset finance, and more. These specialized lending solutions can be tailored to meet your unique requirements and circumstances allowing for greater flexibility.
  3. Speedy Response and Disbursement (if approved): Non-bank lenders typically have streamlined processes, resulting in faster loan decisions and disbursements. This can be especially beneficial for you if you have time-sensitive financial needs.

Choosing a non-bank lender

If your adviser suggests a non-bank lender, you will usually be presented with different options. But while it’s easy to take the first option on offer, it’s important to research and evaluate potential lenders thoroughly. Some factors you may want to consider:

  1. Reputation and Reviews: Look for non-bank lenders with a solid reputation, positive customer reviews, and a track record of helping other borrowers.
  2. Transparency and Clear Terms: Ensure the non-bank lender provides transparent information regarding interest rates, fees, repayment terms, and any potential fees or charges.
  3. Compliance: Check that the non-bank lender is a member of an external dispute resolution scheme.
  4. Seek Professional Advice: If unsure about the terms or specific requirements, consider consulting with your financial adviser who can guide you through the process and help you make informed decisions.
  5. Competitive Interest Rates: While it is true that non-bank lenders may have slightly higher interest rates compared to traditional banks, they can still offer competitive rates, especially for borrowers with unique circumstances. Shopping around and comparing offers from various non-bank lenders can help you find interest rates that align with your financial situation.

Not all home loans are equal, so be sure to conduct thorough research, compare loan options, and consider your individual circumstances and preferences when deciding on a lender and a loan. Seeking advice from financial advisers could also provide valuable insights and help you make informed decisions that best suit your needs.

You can find more information about Pepper Money home loans by talking to a financial adviser who is accredited with Pepper Money.

PEPPER MONEY DISCLAIMER: All loan applications are subject to Pepper Money completing responsible lending checks and considering each customer’s individual circumstances.

You are protected by responsible lending laws. Because of these protections, the recommendations given to you about home loans are not regulated financial advice. This means that duties and requirements imposed on people who give financial advice do not apply to these recommendations. This includes a duty to comply with a code of conduct and a requirement to be licensed.

Terms, conditions, fees and charges apply. Information provided is factual information only, and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.

© Pepper New Zealand Limited NZBN 9429031065153. NZ Company Number 3416551 member of an approved dispute resolution scheme FSP number 660011. Pepper and the Pepper Money logo are registered trademarks of Pepper Group Assets (Australia) Pty Limited and are used under licence.

Campbell Smith

With over 20 years’ experience in the banking and financial services industry, Campbell has substantial executive leadership, financial and operational experience, having worked in various commercial functions across mortgages and asset finance.
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DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute a financial advice service. The article is only intended to provide education about the New Zealand mortgages and home loans sector. Nothing in this article constitutes a recommendation that any strategy, loan type or mortgage-related service is suitable for any specific person. We cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you. Before making financial decisions, we highly recommend you seek professional advice from someone who is authorised to provide financial advice.

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