In the current lending market many find themselves locked in from a borrowing perspective; investors looking to further grow their investment portfolios are unable to borrow any further, or cannot refinance debt to extend IO periods. Many are unaware that at this point there may be further options available through non-conforming lenders.
Who or what are non-conforming lenders? Primarily these lenders are Liberty, Pepper & Bluestone. These are smaller non-bank lenders that offer more flexible options than the banks.
How are non-conforming lenders different? They provide much more generous serviceability than normal bank lenders, because in simple terms they don’t need to comply to as much regulation as the banks (hence the term non-conforming!). For instance, they’ll evaluate lending based on the actual repayments for your investments/mortgages, rather than at a 7.25%+ assessment rate which the banks need to adhere to. In some instances this can unlock significant borrowing capacity, IN a recent example for a client they could borrow $1m with bank lenders, or over $1.5m+ with Liberty for their next purchase.
This flexibility generally comes in the form of a higher interest rate and fees. Traditionally non-conforming lenders have had a niche role for those with poor credit where major lenders won’t accept them. In recent times with the lending market changing we’ve seen this evolve and Prime (good credit) lending rates have reduced to the point of being competitive with mainstream lenders. It was only last week that Bluestone announced a raft of rate cuts for prime customers/products to join Liberty and Pepper as competitive in this space.
If that isn’t enough for some, there is yet another option beyond the non-confirming lenders, and that is “private lending”. I’ll save commentary on this for another time but this provides the next level of flexibility for borrowing, although generally comes at a significant cost.
Whatever position you’re in, there may be more options so feel free to get in contact with us for a no obligation assessment!
Eastside Kitchen & Bar in Chippendale’s famous “Fire & Ice Dessert” – lots of options on that dish – also worth a look!