Common Questions About Non-Bank Lenders

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 Estimated read time: 3 Minutes

What exactly is a non-bank lender? As a proud non-bank ourselves, we explore the facts and expose common misconceptions about these institutions who play a vital role in Australia's home loan and lending ecosystem.

What is a non-bank lender

What is a non-bank lender?

Put simply, a non-bank lender is a finance provider that isn't a bank. As they’re not deposit-taking institutions, their loans aren't funded by customer deposits. Instead, their loans are funded by pooling together debt and on-selling it to institutional investors. 
Are non-bank lenders as trustworthy

Are non-bank lenders as trustworthy?

Absolutely. Non-banks are perfectly trustworthy home loan providers who help drive competition with the mainstream lenders in Australia’s mortgage market. They offer borrowers an alternative to a traditional bank loan, which not only gives people more choices, but provides an option for those who fall out of the big bank’s risk appetite.

Did you know? Non-banks make up a significant part of the home loan market, lending billions of dollars to fund Australian home loans each year.

Do non-bank lenders only give loans to people with a bad credit history

Do non-bank lenders only give loans to people with a bad credit history?

Not at all! Non-bank lenders are an option for prime borrowers - those who could go to a traditional lender and have a squeaky-clean credit score. However, non-bank lenders often specialise in providing loans for so called non-conforming borrowers including self-employed people, first time buyers and property investors.

Some borrowers get knocked back simply because they don’t tick all of the bank's 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 so your loan application may be rejected by a traditional bank lender.

But just because an applicant has been turned down for a loan by a bank doesn’t have to mean they’re a credit risk. Which is why many non-bank lenders, including here at Pepper Money, take all aspects of your circumstances into consideration and use specific lending criteria when assessing your home loan application.

Are non-bank loans more expensive

Are non-bank loans more expensive?

Many things can affect the interest rate you get offered; including market influences, the nature of the loan you’re looking at and credit assessment requirements. 

At Pepper Money, every home loan application is individually assessed based on its own merits, with the assessment carried out by a real person who’ll take the time to understand your situation and look to provide loan options and interest rates suited to your individual circumstances.

Are non-bank lenders financially secure

Are non-bank lenders financially secure?

Absolutely. Non-bank lenders must fully comply with the same consumer credit rules and regulations as any bank does. Applications will only be approved if they satisfy our loan suitability criteria and credit assessment requirements. Ultimately the borrower must be able to pay back the loan. Read more about Pepper Money’s responsible lending practices. In fact, Pepper Money is funded by some of Australia’s leading financial institutions - so you can rest assured knowing that we can support your loan with us. 
Do non-bank lenders have fewer product options than the banks

Do non-bank lenders have fewer product options than the banks?

If anything, non-bank lenders tend to offer a wider range of products that are suited to different niches. Often their approach is more flexible than the banks and their options may be tailored to borrowers who do not fit the traditional lending criteria of the banks.

At Pepper Money, we offer home loans for all types of borrowers; from full-time PAYG customers with a healthy deposit, to those self-employed and small businesses owners working with alternative documentation.

Our approach looks at all aspects of a person’s individual circumstances and credit requirements to help find the right loan for their situation.


Turned down for a home loan? A non-bank could offer more flexible options.

Having a home loan application turned down happens to thousands of people every year. But if it happens to you, don’t be discouraged. We look at the options available.⁠


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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.

All applications are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply. 

The results of the borrowing power calculator are based on information you have provided and is to be used as a guide only. The output of the calculator is subject to the assumptions provided in the calculator (see 'about this calculator') and are subject to change. It does not constitute a quote, pre-qualification, approval for credit or an offer for credit and you should not enter commitments based on it. The interest rates do not reflect true interest rates and the formula used for the purpose of calculating estimated borrowing power is based on the assumption that interest rates remain constant for the chosen loan term. Your borrowing power amount will be different if a full application is submitted and we complete responsible lending assessment. The results in the calculator do not take into account loan setup or establishment fees nor government, statutory or lenders fees, which may be applicable from time to time. Calculator by Widgetworks.

Pepper Money Personal Loans is a brand of Pepper Money Limited. Credit is provided by Now Finance Group Pty Ltd, Australian Credit Licence Number 425142 as agent for NF Finco 2 Pty Limited ACN 164 213 030. Personal information for Pepper Money Personal Loans is collected, used and disclosed in accordance with Pepper’s Privacy Policy & the credit provider’s Privacy Policy.

Pepper Money Limited ABN 55 094 317 665; AFSL 286655; Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans.

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