Investors turn to non-bank lenders despite higher interest rates

Non-bank lenders have long been an alternative for self-employed borrowers and those with poor credit. Now, they could become a popular choice for investors.But there are several trade-offs that borrowers of all kinds should be aware of.Investors no longer have negative gearing calculations on their side.Co-author of The Quick-Start Guide to Your First Property, and Sphere Home Loans director Rachelle Kroon says she believes more investors will lean towards non-bank lenders following the federal budget changes to negative gearing.While all lenders are bound by responsible lending regulations, non-bank lenders aren’t governed by the Australian Prudential Regulation Authority in the same way that banks are.Now that negative gearing can’t be used in an investor’s serviceability calculations, non-banklenders are becoming more attractive to those whose borrowing capacity has been reduced as a result.Author and mortgage broker Rachelle Kroon.Kroon says she recently helped a client buy their third investment property using a non-bank lender after a bank had rejected their loan application.MORE: Salary you now need to afford home in each Sydney suburbBad news for Aussies who earn under $25...