With some lenders taking weeks to approve a deal, borrowers can be left frustrated and lacking the certainty they need to move forward. But there is another solution.
Non bank Private Lenders can often move fast and may offer greater flexibility. With the expertise to assess more complex deals, evaluate risk and manage it appropriately, many non-bank lenders can provide solutions for a wider range of borrowers and circumstances. This could include developers looking to fund their next project or who need to fill a gap between completion and sales. Or business borrowers who need effective funding solutions and have a property they can take out a mortgage against.
If you’ve only dealt with major banks for funding, you may be unsure how non-bank lenders work. Here’s a quick look at the process – and how non-bank lenders are approaching the race on speed to settlement.
What is private lending?
Private lenders differ from mainstream banks in that they don’t take deposits. This means they are funded by other sources – most often a mixture of private investors and securitisation.
They are regulated differently as a result – all banks and non-bank lenders are regulated by the Australian Securities and Investments Commission (ASIC), but deposit-taking institutions have additional regulation from the Australian Prudential Regulatory Authority (APRA).
This gives private lenders an additional level of flexibility in the types of borrowers they can service and how they manage their processes. Non-bank lenders also don’t tend to have physical branches, and with lower overheads they can put their resources into making their borrower experience a seamless one.
A race against rigid processes
Mainstream banks can take months to move from application through to settlement, so you may be wondering how non-bank lenders can work so much faster.
Non-bank lenders typically have lean organisational structures compared with major banks, who often have multiple layers of approval levels. This is why they can review and approve applications quicker than a mainstream bank, expediting applications that are time-sensitive.
How can I speed up the settlement process?
If you’re looking for a fast turnaround on an application, there are a few things you can do that will help avoid any unnecessary delays.
The most important thing is to make sure the application is complete. Missing documents and information are amongst the biggest cause of delays to application assessment, along with discrepancies between the application details and supporting documents. If your lender does come back with questions or requests more information, it’s important you respond as quickly as possible.
There’s a misconception that complex deals take longer to review and approve, but when a lender has the expertise and processes in place to quickly assess the level of risk and determine how to manage it, there shouldn’t be any additional delays.
Individual lenders have different turnaround times and policies. If you’re looking for capital at speed, it’s worth checking the individual lender’s policies before you submit your application.