Non-Bank Lender of the Year

Would-be borrowers who are rebuffed by the big banks can turn to innovative alternatives

Anew category in the Consumer Finance Awards for 2020, the Non-Bank Lender of the Year recognises the top non-bank institutions that score highest when it comes to factors such as product range, loan quality, the ability to raise lending capital, transparency and innovation.

The winner, La Trobe Financial, would be well known to Money readers for its mortgage trust investment offerings but perhaps lesser known for its loan products. Cory Bannister, chief lending officer at La Trobe Financial, says the wealth management group started as a home lending specialist when it opened in 1952 and has now served more than 150,000 customers across its entire business.

Its residential home loan starts with an interest rate of 3.59%pa and can be for personal or business/investment purposes. The maximum loan amount is $2 million (with a 75% loan-tovalue ratio or less) and, at the smaller end, loans from $100,000 can be approved up to a 95% LVR. You also have the option to make interest-only payments for the first five years before reverting to a principal and interest loan with a 0.40%pa loading to your interest rate.

Bannister says the most popular loan product used by mortgage brokers is its Lite-Doc loan, first introduced in 1990. This loan starts at 4.59%pa, has a broader scope for its use and its verification only requires an accountant’s letter or trading statements or business activity statements (BAS). It also has a slightly higher application fee than for regular full-doc loans.

The Lite-Doc Loan largely caters to the self-employed.

Over the past 12 months, and into the future, Bannister says La Trobe is committed to scaling up its financial solutions to “underserved markets”. At a time when banks are narrowing their lending, non-banks have an opportunity to step up and assist.

“In the current Covid-19 environment this is a sizeable commitment and is supporting what appears to be a growing market of consumers who banks are turning away; we are continually innovating to ensure gaps in the market are filled,” he says.

“Data released recently by the Reserve Bank of Australia has indicated that housing credit growth is at a record low, and on top of this it has been reported that one out of every five customers seeking credit is being declined by the major banks.”

During the pandemic borrowers experiencing financial hardship can access a four-month repayment moratorium, interest-only periods and the waiving of some fees and charges, says Bannister.

He adds that borrowers won’t have to contact overseas processing centres when taking out a loan and the group prides itself on quicker approvals. “We have accessible loan officers you can speak to who are incredibly responsive and transparent – borrowers can also speak directly to the decision makers,” says Bannister.

In second place, Resimac’s Prime Home Loan has a variable rate of 2.81% for an 80% LVR or less with a minimum borrowing of $150,000 and loan terms between 15 to 30 years. It comes with 100% offset account and redraw facility. You can make unlimited extra repayments and there’s an annual fee of $299.

Third placed Firstmac’s ZIP Home Loan has a variable rate of 2.83% for an 80% or less LVR with a minimum borrowing of $250,000 and loan terms of 15 to 30 years. It comes with a redraw facility, a ZIP Visa debit card ($5000 limit) and $500 in upfront fees.