Jun 29, 2019 8:14:00 AM

First tier lenders vs. second tier lenders

Topics: Lenders, nz mortgage, non-bank lender, lending options, NZ Mortgage Adviser, Home Loan Advice, Mortgage Advice 1

Stricter lending conditions across New Zealand and Australia have led to a rise in the number of borrowers turning to second tier lenders for finance. Second tier lenders – or non-bank lenders - while tightly regulated, are privately owned and often have more flexibility in the rates and fees they can offer. As a borrower who doesn’t quite meet bank lending criteria, a second tier or non-bank lender may be the answer.

Tips on Refinancing Your Mortgage

What’s the difference?

Because of their size and scale, first tier lenders or banks are often seen as a more reliable option for finance. Banks offer attractive rates, good customer service and a fairly simple application process. However, due to regulations, they often have stricter rules and lending conditions, with very little flexibility for any deviation from these.

Non-bank or second tier lenders are institutions other than a bank, credit union or building society who source their own funding and offer loan products to customers. While these lending institutions do not hold a banking licence, they are still tightly regulated by consumer credit governing bodies. In most cases, second tier lenders can help buyers secure a mortgage with a lower deposit, bad credit or those who are self-employed.

Pros and Cons

It’s worth noting that both banks and non-bank lenders have to abide by the same consumer credit laws in both New Zealand and Australia, in that they must be transparent with fees and rates and make this information available when requested.

Take a look at the pros and cons of securing finance with bank lenders and non-bank lenders:


Pros: Many borrowers feel safer with banks as they are often more established, often the bank is already handling their everyday banking.

Cons: Stricter lending criteria means less flexibility, big banks can be seen as less personal.

Non-bank lenders

Pros: Competitive rates, provide solutions for borrowers who don’t meet bank’s lending criteria.

Cons: Being smaller, they can be more vulnerable to fluctuating economic conditions.

At Mortgage Express, we work with a panel of both bank and non-bank lenders. Our team of advisers will shop around on your behalf, compare rates and fees, and help you decide on the right financial solution to fit your needs. Contact us and one of our advisers will get in touch to discuss your needs further.

For more tips and advice around managing your money, consolidating your debts, or applying for finance, follow Mortgage Express on Facebook and Twitter, or contact one of our mortgage advisers.


While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.

A Disclosure Statement is available on request and free of charge.