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Squirrel launches no-fee personal loans

Adviser Squirrel Mortgages has launched a no-fee loan product for homeowners looking to renovate and improve their properties.

Friday, July 27th 2018, 12:53PM 5 Comments

The adviser has started the roll-out of its "Homeowner’s Loan" product, which will provide up to $70,000 of financing to Squirrel customers. The product is aimed at owner-occupiers rather than property investors.

Loans will be funded through Squirrel's peer-to-peer lending platform by retail investors, according to the company's marketing manager Marita Kerry.

Kerry said the product, to be launched next week, was New Zealand's first no-fee personal loan: "As far as we’re aware there’s no other loan in the market that gives homeowners this flexibility and the ability to get stuck into a home renovation as quickly and easily as this product allows." She described the proposition as a "consumer finance product that allows homeowners to tackle a renovation without having to talk to the bank".

The loan can be used for renovations, upgrades, and other big purchases needed to improve a home, such as new kitchens, bathrooms, or swimming pools. Customers will receive a rate of 7.95 percent p.a.

The first year of the loan is structured with interest-only repayments. Following the first year, customers can consolidate the loan into their mortgage, or convert it into an amortising term, Squirrel said. Owner-occupied properties will be required as security for loans above $20,000.

In marketing materials sent to clients, Squirrel's John Bolton said it expected the loans to receive strong demand from peer-to-peer investors: “Homeowners tend to be responsible borrowers and the money’s being used for things for the house, meaning the risk to our investors is lower and most importantly we can make the terms of the loan extremely attractive to you, the borrower. There really is nothing quite like it and we’re super proud of being able to offer it to you.”

Tags: John Bolton Lending Peer to Peer Lending

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Comments from our readers

On 1 August 2018 at 9:18 am Ricardo said:
At 7.95% it would make more sense surely to ask your bank for a loan?
On 1 August 2018 at 12:27 pm Murray Weatherston said:
Can there be some light thrown on how exactly the security for a loan (>$20,000) will be arranged when the owner-occupier has an existing 1st mortgage outstanding of $150,000, and the 1st mortgagee has priority up to 2 times the value of the home?
On 3 August 2018 at 10:46 am smitty said:
@ Murray: Depending on how they wish to register, by way of a 2nd mortgage or a caveat, they can easily do so. In terms of a priority amount, it is only an acknowledgement of the "bank's" first dibs up to that amount. The reality is that it can only claim principal, interest, costs and charges - nowhere near the priority amounts from 1.3 x or higher. Rate of 7.95% thats not bad if less than the $20,000, as you will find a bank will happily give you a personal loan at a higher rate, even with a mortgage in the background...
On 3 August 2018 at 6:46 pm Murray Weatherston said:
@smitty
Two supplementary questions please. BTW I don't know the answers, and if I had a guess at the answer , it would only be a guess.
1. Does a mortgagor always have the right to arrange a 2nd mortgage? I thought some 1st mortgagees had a clause that said the mortgagor could not lodge a 2nd without the approval of the 1st.

2. When you say banks are happy to make personal loans when 1st mortgages exist, does that only apply when the bank itself holds the 1st? It's easy to see why Bank A holding 1st mortgage over P's house would do so, because terms of mortgage probably extend to any moneys borrowed anyhow from A - and they earn more interest income on the personal loan than they would by simply extending the mortgage.
But are you saying Bank B will give P a personal loan when Bank A holds the mortgage?
It should be clear these two situations are vastly different.
On 6 August 2018 at 8:29 am smitty said:
@ Murray: 1. Not sure re the legal amble in Mortgage Document, if there is a Lawyer here can they comment, but yes agree that I have heard of some Mortgage documents stipulating not other charges over the security without prior consent. 2. Bank b, provided they meet servicing, can give a personal loan to a customer, whilst bank a has the mortgage. My point re this, was more that bank b can give a personal loan to a client, charge an unsecured rate, yet continue to hold a mortgage for the same client. Personal loans tend to be given to clients that are maxed out on the secured property.

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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