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Building a non-conforming business

Building your existing mortgage business can be as simple as looking outside the square. Non-conforming lenders have opened up new markets to mortgage brokers that are still largely unserved, read on to find out how to secure your piece of the pie.

Friday, April 2nd 2004, 1:37PM


Everyday, a large number of loan applications do not meet the lending criteria of traditional lenders. There can be a host of reasons for this including short-term self-employment, imperfect credit rating, irregular income source, old age, gifted deposit or unusual loan purpose or size.

Only a few years ago, these applicants would have had little choice but to forego obtaining a loan or settle for expensive options such as solicitor lending, finance companies or credit cards.

For the broker involved this meant a lost sale. Today however there are innovative financial solutions available: enter the non-conforming lenders.



The first non-conforming lender on the New Zealand Mortgage scene was Liberty Financial. Having successfully pioneered the Australian non-conforming market in 1997, Liberty delved in to our market in early 2001 with a view to bringing the benefits of customised lending to more would-be borrowers. The Australian story had shown that not only did this new form of finance provide a win for borrowers, but it also opened up new opportunities for mortgage brokers, with many now operating solely in non-conforming loans.

Like any start-up business, building a non-conforming loan portfolio can be considered daunting. How do you target this niche group of borrowers? How much work is required to get each application over the line, and how do you build this area of business so that it contributes healthily to your bottom line?

According to Liberty Financial, one of the first steps is to adopt the right mind-set. Non-conforming loans are a positive. They provide financial solutions to people who might have previously been left wanting. They provide a means for people who have experienced past financial difficulty to rebuild their financial record in order to re-finance down the track with a traditional lender.

The second step is to communicate these benefits. “Despite the growth of our industry over the past few years, there are still plenty of people out there who simply don’t know this type of help is available,” tells Grant Coulter, Relationship Manager at Liberty Financial. “The most successful non-conforming introducers on our books take advantage of this fact and really belt the news out. This can take the form of local newspaper or radio ads but it can also be as simple as utilising your relationships with local bankers to ensure any loans they can’t write are referred your way. Networking with Accountants and Solicitors, people who deal with folk that require financial advice or assistance is also a way in,” Grant said.

Because each non-conforming loan attracts an interest rate that reflects the borrower’s unique situation, putting together an application form can require the gathering of a little more information than a traditional loan requires. Time is money of course and in acknowledgement of the extra effort required non-conforming lenders usually offer higher commissions than their traditional counterparts. Worth a look-in.

Beyond the economics of this form of lending, there are also personal rewards involved. Coming up with financial solutions for people in difficult situations usually gains a lot of appreciation. “Not only are people likely to keep you on as their personal broker, but they’re also likely to give you referrals for both traditional and non-conforming business. The feedback we get from our distribution network says that providing strong non-conforming services generates business of all kinds,” Grant said. “Non-conforming loans are really about empowering brokers to provide real financial solutions, in a real time environment.”

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 4.05 4.49
ANZ Special - 3.55 3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank ▼5.20 ▲4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▲3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 3.45 3.89
Sovereign 5.30 ▼3.89 ▼4.05 ▼4.39
Sovereign Special - ▼3.39 ▼3.55 ▼3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.45 3.99
Median 5.34 3.99 4.07 4.39

Last updated: 9 December 2019 9:02am

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