Your fixed-rate mortgage expires in three months. You've banked with the same lender for eight years, never missed a payment, and your property has increased in value. You expect refinancing to be straightforward—a simple rollover to a new fixed term.
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Then you receive the letter: "We regret to inform you that we're unable to offer refinancing on your property. Your loan will convert to our variable rate at 9.2%, or you'll need to arrange alternative financing."
You're shocked. What changed? You lost your job and started contracting six months ago. Your income actually increased, but now you're self-employed. Or perhaps you had a credit hiccup during Covid. Or your property is a cross-lease. Or you're over 65. Whatever the reason, your bank has decided you no longer meet their current lending criteria—even though you've been a model customer for years.
This is where non-bank refinancing becomes essential. When banks won't extend or renew your existing mortgage, alternative lenders provide refinancing solutions that keep you out of expensive variable rates and give you time to resolve whatever issue the bank has identified.
Non-bank refinancing is replacing an existing bank mortgage with alternative lending when your current bank declines to renew or extend your facility. This happens when:
The key distinction: You're not in arrears or default. You've been paying your mortgage reliably. The bank simply won't continue lending under their current policies—even though you're the same customer they approved years ago.
| Decline Reason | Why It Matters to Banks | Impact on You |
|---|---|---|
| Self-employment | Less than 2 years trading history | Income increased but structure changed |
| Age | Over 65-70 reduces loan term | Perfectly affordable but age-based decline |
| Credit events | Defaults, judgements, bankruptcy | Historic issues now resolved |
| Property type | Cross-lease, leasehold, apartment | Property was acceptable at purchase |
| Debt-to-income | Policy limits tightened | Your situation unchanged but rules changed |
| Rental property | Reduced investor appetite | Bank financed it originally |
| Income verification | Can't verify via standard payslips | Contract work, overseas income, trust income |
| Relationship breakdown | Separation/divorce in progress | Finalising property settlement |
The frustrating reality: Banks assess refinancing applications as if you're a new customer. Your payment history means less than their current policy requirements.
Alternative lenders assess refinancing differently:
| Factor | Bank Assessment | Non-Bank Assessment |
|---|---|---|
| Payment history | Less important than current criteria | Primary indicator of creditworthiness |
| Property security | Strict valuation and type rules | Focus on actual security value |
| Income verification | Standard documentation required | Flexible evidence accepted |
| Credit history | Recent perfect record expected | Historic issues with explanation accepted |
| Age | Maximum age limits apply | Assessed on individual circumstances |
| Exit strategy | Must meet standard criteria | Clear repayment pathway sufficient |
The goal: Provide 12-24 month refinancing facility that gives you time to resolve the issue preventing bank lending, then refinance back to bank rates.
Karen Thompson, 52, owned a $680,000 home in Tauranga with a $340,000 mortgage. She'd banked with the same lender for 11 years and never missed a payment. Her mortgage was on a three-year fixed rate at 6.4%, expiring in September.
In March, Karen's employer restructured and made her role redundant. With 20 years' marketing experience, Karen decided to establish her own consultancy. Within two months, she had three major clients on retainer contracts providing $115,000 annual income—more than her previous $98,000 salary.
Karen's financial position:
In July, Karen contacted her bank about refinancing her September expiry.
Bank's response:
Bank's alternative offer:
Karen's frustration: "I'm earning more than before, my mortgage is only 50% LVR, I've paid them perfectly for 11 years. They're happy to keep charging me 9.2% variable, but won't refinance me at 6.8% fixed rates? That's an extra $680/month just because I'm self-employed for six months."
Luminate provided an 18-month refinancing facility:
Loan structure:
Assessment approach:
Cost comparison:
18-month refinance plan:
Karen's perspective: "Paying an extra $300/month is annoying, but it's $380/month less than the bank's variable rate would have been. And in 18 months, I'll have the 2 years' trading history the bank requires. Luminate actually looked at my situation—my income, my experience, my payment history—rather than just applying a blanket policy."
18 months later:
Total cost of non-bank refinancing:
Alternative cost if stayed on bank variable:
Karen's reflection: "The $10,600 bought me certainty, a clear path back to bank rates, and recognition of my actual financial situation rather than rigid policy. Worth every dollar to avoid the stress of variable rates and potential increases."
1. Your bank declines refinancing but you've paid perfectly
If you have:
2. Self-employed less than 2 years
Banks require 2 years' trading history. Non-bank refinancing bridges the gap when:
3. Credit issues in your past
Historic credit problems don't reflect current reliability:
4. Age-based bank decline
Banks have maximum age limits. Non-bank considers:
5. Property type issues
Banks tightened lending on certain property types:
6. Buying time to resolve temporary issues
Use non-bank refinancing while you:
1. You're already in arrears or default
Non-bank refinancing is for customers in good standing who banks decline for policy reasons. If you're behind on payments:
2. Property value has declined significantly
If your LVR increased due to value decline:
3. The underlying issue won't resolve
Non-bank refinancing buys time, but needs an exit strategy:
4. You have other bank options
Before using non-bank refinancing:
Don't assume all banks will decline. Policies vary significantly:
Example variations:
Benefits of using broker:
When this works: Your situation falls into some bank's acceptable criteria, just not your current bank's.
If non-bank rates seem too high:
Consider variable rate while you:
Advantages:
Disadvantages:
Best for: Very short timeframes (3-6 months) until bank criteria met.
If your issue is borderline:
Strategy:
Example:
Best for: Situations where LVR is the primary concern.
If refinancing isn't viable:
Consider if:
This isn't failure— sometimes downsizing or restructuring makes financial sense regardless of lending availability.
Back to Alternative Lending Solutions Guide
Non-bank refinancing (10.25% interest-only):
Bank variable rate (9.2% interest-only):
Difference: $10,813 premium for non-bank certainty
Value proposition:
Non-bank refinancing (9.75% interest-only):
Bank variable rate (9.2% interest-only):
Difference: $9,550 premium
Non-bank refinancing (9.5% interest-only):
Bank variable rate (9.2% interest-only):
Difference: $13,000 premium
Important consideration: These comparisons assume variable rates remain constant. If variable rates increase during the period (which they often do), the non-bank fixed rate could actually cost less or similar.
Q: How is this different from refinancing with another bank?
A: Bank-to-bank refinancing is always preferable if available—lower rates, longer terms, standard conditions. Non-bank refinancing is specifically for situations where all banks decline due to policy restrictions. It's the solution when bank refinancing isn't an option.
Q: Will non-bank refinancing affect my credit score?
A: The application process involves a credit check, which has minimal impact. Successfully maintaining a non-bank facility and refinancing back to a bank actually demonstrates creditworthiness. What damages credit is missing payments or defaults—which non-bank refinancing helps you avoid.
Q: Can I refinance back to my original bank?
A: Yes, if you meet their criteria when you reapply. Many customers refinance back to their original bank once they've resolved the issue (reached 2 years' trading, built required credit history, etc.). Some banks even view you more favorably for having addressed the issue professionally.
Q: What if I can't refinance to a bank after 18-24 months?
A: Most customers successfully refinance to banks once they've resolved the qualifying issue. If bank refinancing remains unavailable, options include: extending with Luminate (often at improved rates), trying specialist lenders, restructuring finances, or considering property sale if circumstances require.
Q: Do you refinance investment properties?
A: Yes, non-bank refinancing works for both owner-occupied and investment properties. Investment properties may have slightly higher rates (0.5-1% premium) but are regularly refinanced when banks decline due to investor lending restrictions.
Q: What's the maximum LVR for non-bank refinancing?
A: Typically up to 70% LVR for straightforward situations, occasionally up to 75% for strong applications. Higher LVRs make refinancing more challenging and expensive. If your LVR exceeds 75%, paying down debt first may be necessary.
Q: Can I make extra payments to reduce the principal?
A: Most facilities allow extra payments without penalty. This is encouraged as it: improves your position for bank refinancing, reduces interest costs, and demonstrates financial management. Confirm specific terms with your facility agreement.
Q: How long does non-bank refinancing approval take?
A: Typically 10-15 business days from application to settlement. Faster than bank refinancing (which can take 4-6 weeks) but requires similar documentation. If your existing mortgage is expiring soon, contact us at least 6-8 weeks beforehand to ensure smooth transition.
Q: What if my property needs a revaluation?
A: Revaluation is sometimes required, typically costing $600-$1,200. If your property has increased in value since purchase, this can improve your LVR and potentially your interest rate. If values declined, it may affect available lending. Council valuations can sometimes be used if recent and appropriate.
The goal is always to refinance back to bank rates. Here's how to prepare:
For self-employment issues:
For credit issues:
For age-related issues:
For property issues:
| Milestone | Actions | Timeline |
|---|---|---|
| Months 1-6 | Maintain perfect payment history, build documentation | Ongoing |
| Month 9-12 | Engage mortgage broker, prepare refinance docs | Start planning |
| Month 12-15 | Apply to banks with broker assistance | Active applications |
| Month 15-18 | Complete bank refinance | Settlement |
Start early: Don't wait until your non-bank facility expires. Begin refinance process 6-9 months into the term to ensure smooth transition.
Cross-lease properties:
Leasehold properties:
Apartments:
Rural or lifestyle properties:
Non-bank refinancing available throughout New Zealand:
All applications assessed individually regardless of location. Regional property markets understood and incorporated into assessment.
Don't let bank policy changes force you onto expensive variable rates or into property sale. Contact Luminate Financial Group to discuss how our non-bank refinancing solutions can provide the time you need to resolve lending issues and return to bank rates.
📞 Call 0800 333 400
📧 Email askus@luminate.co.nz
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