By Jason Given - 2026-08-31 - 7 min read
What is a non-bank lender?
A non-bank lender is a lender that is not an Authorised Deposit-taking Institution (ADI). Unlike banks, they do not take deposits and are not regulated by APRA (the Australian Prudential Regulation Authority). Instead, they fund loans through wholesale markets, securitisation, and private credit facilities.
Non-bank lenders are regulated by ASIC (the Australian Securities and Investments Commission) and hold an Australian Credit Licence. They must comply with the same responsible lending obligations as banks, including the National Consumer Credit Protection Act.
Major non-bank lenders in Australia include Pepper Money, Liberty Financial, La Trobe Financial, Firstmac, Resimac, and Bluestone. These are not "loan sharks" - they are large, established institutions that have been operating for decades. Several are publicly listed on the ASX.
Why non-bank lending is growing
The growth is being driven by bank tightening. Since 1 February 2026, APRA's debt-to-income (DTI) limit caps the share of a bank's new lending that can go to borrowers with debts of six times their gross income or more at 20%, so high-DTI applications are harder to get through once a bank nears its quota. The 3% serviceability buffer makes it harder to qualify at banks even when actual repayments are affordable. Banks have also become stricter on income verification, particularly for self-employed borrowers and those with complex income structures.
Non-bank lenders fill the gap. Because they are not regulated by APRA, they are not bound by the same macro-prudential rules. They set their own credit policies, which gives them flexibility to approve borrowers that banks cannot.
When a non-bank lender makes sense
- 1.Your DTI is above 6x. APRA's debt-to-income cap applies to banks only, not non-bank lenders. If you earn well but have existing debts or are buying in an expensive market, a non-bank lender may approve you where a bank cannot.
- 2.Self-employed with complex income. Non-bank lenders are often more flexible with business structures, add-backs, and short trading histories. Some will lend with as little as six months of BAS statements where banks require two years of tax returns.
- 3.Credit history issues. Some non-bank lenders specialise in "near-prime" or "specialist" lending for borrowers with defaults, judgments, or thin credit files. Rates reflect the risk, but approval is possible where banks decline outright.
- 4.Foreign income or expat lending. Non-bank lenders may accept income sources that banks will not, including overseas employment income, foreign rental income, and complex remuneration structures.
- 5.Unusual property types. Hobby farms, rural properties, mixed-use buildings, high-density apartments - non-bank lenders often have broader property policies than major banks.
- 6.Speed. Some non-bank lenders offer faster turnaround than major banks, particularly for straightforward applications. When timing matters - for example, at auction or with a tight settlement - this can be the difference.
What the trade-offs are
Non-bank lending is not always the cheapest option, and it is important to understand the trade-offs before choosing this path.
Rates are sometimes - not always - slightly higher than the best bank rates. For prime borrowers with good credit and standard income, the difference is typically 0.2-0.5% above comparable bank products. Some non-bank products are genuinely competitive with bank pricing, particularly for investment loans and interest-only lending.
Some non-bank lenders do not offer offset accounts or have limited product features compared to the major banks. Fewer have branch locations, though most are broker-only anyway. Loan portability may be more limited than with a major bank.
For borrowers who qualify at a bank, the bank is usually the better option on rate alone. The value of a non-bank lender is when the bank says no. The real comparison is not "bank vs non-bank" - it is "non-bank vs nothing."
How Lendology uses non-bank lenders: Lendology's panel includes both bank and non-bank lenders. We do not default to non-bank lending - we exhaust bank options first because they typically offer the best rates and features. But when bank policy does not fit - whether because of DTI, income type, credit history, or property type - we have access to non-bank alternatives that can get you approved. More than 75% of all new home loans are arranged through brokers, and non-bank lenders are a key reason why.
Frequently asked questions
Are non-bank lenders safe?
Yes. Non-bank lenders are regulated by ASIC and hold Australian Credit Licences. They must comply with responsible lending obligations, provide cooling-off periods, and meet the same consumer protection standards as banks. Major non-bank lenders like Pepper Money and Liberty have been operating for over 20 years and are publicly listed companies.
Are non-bank interest rates higher?
Not always. For prime borrowers (good credit, standard income, standard property), non-bank rates are typically 0.2-0.5% above the best bank rates. For borrowers in specialist categories (credit issues, complex income), the rate premium reflects the additional risk. Some non-bank products are genuinely competitive with bank pricing. Lendology compares both.
Can I refinance from a non-bank to a bank later?
Yes. Many borrowers use a non-bank lender as a stepping stone. For example, a self-employed borrower with only one year of trading history might start with a non-bank, then refinance to a bank once they have two years of tax returns. There is no lock-in, though you should check for early exit fees on fixed rate products.
Do non-bank lenders have to follow APRA rules?
No. APRA regulates Authorised Deposit-taking Institutions (banks, credit unions, building societies). Non-bank lenders are regulated by ASIC instead. This means APRA's serviceability buffer and DTI cap do not apply to non-bank lenders, though most non-bank lenders apply their own internal serviceability criteria which are broadly similar.
Been knocked back by your bank?
Book a chat with Lendology. We will assess whether a non-bank lender can get you approved - and at what rate.