Ideally, borrowing through a Trading Bank is always the ultimate goal.

Trading Bank lending is the cheapest and provides the longest borrowing timeframe - keeping monthly repayments as low as possible. This type of lending does come at a “cost” however. In return for lower rates and favourable terms the banks also take very little risk. This means that some opportunities that a borrower sees to make money on the dwelling by thinking outside of the square, having a vision about adding value to a run-down property or trading property regularly for a gain do not fit into the bank’s idea of “low risk”.

Non-banks have always been good for borrowers who have credit issues, cannot adequately prove income, or need to borrow higher against investment property (we can get up to 85% against rental properties in some cases). For this reason, non-bank funders are often overlooked by more “entrepreneurial” borrowers – those that may earn well, have a great vision for improving property and have perfect credit. With the types of non-bank lenders now in the market, the distinction between the interest rates and terms through a traditional bank and non-bank is not that different in many cases.

The other point overlooked is that non-bank lending is often not a long-term necessity. Borrowing through a non-bank allows clients to acquire property and gives a period where that property (or personal situation) can be de-risked to the point of taking the lending back to a mainstream lender. It often allows borrowers to simply bring forward purchasing plans, and secure property, at a stage before trading bank rules would allow it.

There are a number of non-bank funding options to suit different borrowers and borrowing situations, so if you have a project in mind in makes complete sense to find out what your options are.