When a major bank says your borrowing capacity is $600,000, that is that bank’s answer, not the market’s. Non-bank lenders, funded by wholesale markets rather than deposits, play by meaningfully different rules, and for the right borrower they can approve hundreds of thousands more.
What makes a lender "non-bank"?
Non-bank lenders (Pepper, Liberty, Firstmac, La Trobe and dozens more) hold an Australian credit licence and follow the same responsible lending laws as banks, but they do not hold banking licences or take deposits. Less prudential overhead means more policy flexibility, which is exactly where extra capacity comes from.
Where the extra capacity comes from
- Assessment buffers: banks must test you at your rate plus 3%. Some non-banks apply lower buffers to refinances of existing debt, which alone can add six figures of capacity.
- Income recognition: more generous treatment of bonuses, overtime, casual income and rental yield.
- Existing debts: some assess your other loans at actual repayments rather than buffered rates, a huge difference for investors. See how many properties you can afford.
- Credit events: defaults and complex histories priced case by case instead of auto-declined.
The trade-offs, honestly
Rates typically run 0.2 to 1% above major-bank pricing depending on how far from vanilla your file is, and there is no branch network. Funding costs also move faster with markets. The sensible pattern: use a non-bank to get the deal done or maximise capacity now, then refinance to sharper mainstream pricing once your file or LVR improves.
Who benefits most
Investors near the serviceability ceiling, self-employed borrowers with one good year, credit-impaired borrowers rebuilding, and anyone a bank algorithm cannot categorise. A broker matters double here, because non-bank policy is not published on comparison sites. Ask Nathan whether a non-bank quietly doubles your options.