Have you had clients turned down for a home loan application? They’re not alone. Nearly 40% of Kiwis turned down for a loan don’t know there is an alternative*. The good news is today there are genuine options you can point them towards.
Have you had clients turned down for a home loan application? They’re not alone. Nearly 40% of Kiwis turned down for a loan don’t know there is an alternative*. The good news is today there are genuine options you can point them towards.
So why are people turned down?
1. Major banks’ home loan conditions can change
Rejected loans by traditional lenders may be reflection of each lender’s current credit policy, which can change based on market conditions. Borrowers may have had no issues getting a home loan from banks in better economic times, but rejected today because the financial climate has changed.
2. Unusual income
Unusual income or multiple jobs – which are so common these days – are still outside the acceptable criteria for many lenders. Quite simply they don’t tick the banks’ boxes.
3. Credit history issues
Another common reason for an application to be turned down can be credit history. Conventional lenders use an automated credit scoring process, which means an application might be turned down simply because a computer gives an application a score based on past credit history.
It might not be a major default. Even a couple of out of character missed payments can create a real roadblock.
4. Paper work problems
Not having the right paperwork; not having up-to-date tax returns when someone is self-employed or because someone has recently arrived in the country and hasn’t built up a credit or employment history yet.
Without the standard paperwork banks tend to say ‘no’.
5. Past bankruptcy
If someone has filed for bankruptcy in the past traditional lenders tend to flag it negatively, even when they’ve been discharged.
These are all the common reasons for home loans being turned down. So what’s the alternative?
Pepper Money has real home loan options
The good news is that non-bank lenders like Pepper Money can offer people a different, more personal approach to home loan applications. We were set up specifically to help people with loans when the banks said ‘no’.
Our home loans are more flexible, because we believe everyone’s circumstances are different. We have a unique lending model across three sets of home loans. If one set of home loan options doesn’t fit a client’s situation, we’ll step their application into the next option and assess it there and so on, against our whole range of options. So, if there is a way we can help, we’ll find it.
The three types of loan options we have are:
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Prime A standard home loan range for people with no credit history issues but may have less documentation than banks need. |
Near Prime A home loan range that can include old credit history issue if things have been clean for two years or more. |
Specialist Our home loan range to help when there have been credit issues in the last two years. |
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Features: - Fixed and floating rate options available - Alt doc available - Redraw facility - Gifted deposits and other ‘non-genuine’ savings considered - Consolidate up to 4 debts and cash out for acceptable personal purposes - Paid defaults up to $500 are considered |
Features: - Fixed and floating rate options available - Alt doc available - Redraw facility - Gifted deposits and other ‘non-genuine’ savings considered - Debt consolidation and cash out for personal or business purposes up to an 80% LVR - Defaults and judgements registered > 24 months considered (includes discharged bankruptcy)
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Features: - Fixed and floating rate options available - Alt doc available - Redraw facility - Gifted deposits and other ‘non-genuine’ savings considered - Debt consolidation and cash out for personal or business purposes up to an 80% LVR - Defaults and judgements registered < 24 months considered (includes discharged bankruptcy) - Mortgage arrears considered - Newly self-employed accepted (6 month NZBN) |
If you’d like more information on offering an alternative to your clients, talk to Pepper Money today.
0800 945 658
* Pepper Money (2019). Taking the local pulse: Understanding New Zealand home loan applicants. A research report. String Theory Research. New Zealand. 2019.
