Opportunity to help riskier borrowers, niche lender says

by Maya Breen04 Nov 2015
Niche mortgage lender General Finance director William Cairns has noticed more borrowers are being turned down by the banks due to poor credit issues.

Cairns told NZ Adviser there are two types of groups with credit issues - those caused by one off events such as divorce or sickness where the credit report has temporarily taken a turn for the worst and those who are habitually in credit arrears. 

The first type is where the bridging loan comes in. 

“It’s that first group that we’re seeing the banks being a bit stricter - and that’s only an observation I’ve made in the market, I haven’t’ talked to the banks,” says Cairns.

He says these customers can do a bridging loan with the niche lender for 12 months and then go to a mainstream lender, rather than the borrower not being able to purchase their new dwelling.

“I think lenders are under the spotlight because of the Auckland housing market and I think lenders in general are making sure that people can really afford their loans which is good… but I’m saying on credit issues they may be being a little bit too strict, but that’s my opinion.” 

According to BusinessDesk, General Finance offers two types of loans under new financing law – those which are regulated for clients such as mums and dads with an interest rate of 12.95%, and unregulated loans businesses or rental income at 10.95%. 

As an established residential mortgage lender, General Finance focuses on targeting business from the intermediary market, including mortgage brokers, financial planners and insurance agents.  

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