Mortgage broker Cairns Lockie and its sister company, General Finance, have written "some millions of dollars worth" of a mortgage product new to the New Zealand market called 'no financials,' says principal James Lockie.
The product is aimed at those who have difficulty accessing mortgage finance, such as the recently self-employed and new migrants, who have good credit records but can’t provide the kind of financial history most lenders require.
Cairns Lockie, which sources its funds from Australia-based wholesaler Australian Mortgage Services, has been offering its product for a month while General Finance, which sources its funds from another Australian wholesaler, Interstar, began offering a `no financials’ product about three months ago.
"We’ve had a terrific level of inquiry and we’ve written quite a number," Lockie says.
Borrowers can obtain both fixed rate and floating rate 'no financials' mortgages and pay a percentage point more in interest than other loans.
That’s to cover the additional funding and insurance costs inherent in such a product, Lockie says.
For the usual sort of mortgage, borrowers would normally have to be able to provide a two-year financial history.
While usually Cairns Lockie will lend up to 95% of a property’s value, the 'no financials' product is limited to 76% of the value. That reflects the greater risk of the 'no financials' product.
Lockie says his firm gets a lot of inquiries from recent migrants with no work history in New Zealand or whose income comes from outside of New Zealand.
As well as being used to purchase an owner-occupied home, the 'no financials' product can also be used to buy a rental property, a business, or to buy plant and equipment.
