Non-Bank Mortgage Lenders: How a Non-Bank Home Loan Differs
Non-bank mortgage lenders explained: which home loan features, fees and rate moves differ from a bank, and what protections still apply to your loan.
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Non-Bank Mortgage Lenders · Features · Pricing
A non-bank home loan is often described as a bank loan with a higher rate. That misses most of it. The house is the same, but the features, the way the loan is priced, how its rate moves and who funds it can all differ, and those differences matter more than the headline rate.
Quick Answer
A home loan from a non-bank mortgage lender works like a bank home loan day to day, but the features, the way it is priced, how its rate moves and who funds it can all differ. Compare offset, redraw, fees and rate history side by side before the rate itself. A non-bank lender is often where self-employed borrowers land when a bank's checklist does not fit, and a One Doc home loan is one route a broker can show you.
Also called: non-bank home loan, specialist home lender, non-ADI mortgage lender. "Non-ADI" is the regulator's term: the lender does not take deposits.
What changes when your home loan comes from a non-bank mortgage lender?
What changes is the lender behind the loan, not the house or the basic shape of the mortgage. You still borrow against your home, make regular repayments and receive a loan contract that sets out the rate, fees and conditions. The phrase to keep in mind is same house, different lender rules.
The difference starts with money. A non-bank mortgage lender does not take deposits, so it funds the loans it writes with lines of credit from larger institutions and by selling pools of loans to investors. That funding chain shapes its pricing, its appetite and some of its product features. What a non-bank lender is, and why it exists, is covered in the glossary; this insight is about what that means once the lender holds your home loan.
An owner-occupied home loan from a non-bank is still regulated consumer credit. The lender needs a credit licence, has responsible lending obligations and has to deal with hardship requests, the same as a bank. Where self-employed borrowers tend to meet non-banks is at assessment: many non-banks accept different income evidence, which is why a One Doc home loan or a low doc option often sits with a non-bank. What those lenders accept instead of tax returns is set out in our Sydney low doc home loan insight.
Usually the same as a bank home loan
- Secured over your home with a registered mortgage
- Regulated consumer credit with responsible lending checks
- A hardship process if repayments become hard to meet
- Free dispute resolution through AFCA, which licensed lenders must join
Can differ from a bank home loan
- Funded by investors and credit lines, not deposits
- Offset, redraw and fixed options vary more by lender
- A risk fee can sit where mortgage insurance would
- Rate moves can follow funding costs, not only the cash rate
Which home loan features differ between a non-bank and a major bank?
The features that differ most are offset accounts, redraw, fixed rate options and package discounts, because a non-bank has no transaction accounts of its own to attach them to. A major bank can link an offset account to the everyday account you already hold with it. A non-bank may offer an offset through a partner arrangement, offer redraw only, or offer neither on some products.
That is why the rule here is check the features before the rate. A loan with a slightly lower variable rate but no offset can cost more over a year for a business owner who parks tax savings and working cash in the offset. The table below sets out where the two usually differ. Treat every row as indicative, because product design varies by lender and changes over time.
| Feature or cost | Major bank (usually) | Non-bank (usually) | What to ask |
|---|---|---|---|
| Offset account | Linked to the bank's own transaction account | Available on some products, sometimes through a partner account, absent on others | Is it a full offset, and is it on this product or only the premium version? |
| Redraw | Common on variable loans, often online | Common, though minimum amounts and fees vary by lender | Is there a minimum redraw or a fee, and can the lender limit redraw later? |
| Fixed rate options | A range of fixed terms | Fewer fixed terms on some products, none on others | Which fixed terms exist, and what break costs apply? |
| Split loans | Usually available | Varies by lender and product | Can part of the loan be fixed and part variable? |
| Package discounts | Annual package fee with rate discounts and a credit card | Rarely packaged; pricing is usually set per loan | Is any annual or monthly fee charged on top of the rate? |
| Mortgage insurance | Lenders mortgage insurance above a set loan-to-value ratio | Some charge a risk fee instead, some use mortgage insurance | Is it insurance or a fee, and can it be added to the loan? |
| Setup and exit costs | Establishment, valuation and discharge fees, varying by bank | Similar fee types, often priced by risk tier | What is the total cost to set up and to leave, in dollars? |
Indicative only. Features and fees vary by lender and product and change over time.
How do non-bank mortgage lenders price a home loan?
Non-bank mortgage lenders price a home loan by risk tier, so two borrowers with the same lender can pay different rates. The tier usually turns on your credit history, how your income is evidenced, the loan size against the property value and the property itself. A borrower with full financials and a clean credit file usually sits in the sharpest tier; a newer ABN or alternative income evidence usually sits higher.
The rate is only part of the price. Establishment, valuation, settlement and discharge fees all add to it, and the comparison rate is the quickest way to see them folded into one number for a standard loan. Ask for it on every offer, alongside the dollar total of fees.
What is a risk fee on a non-bank home loan?
A risk fee is a one-off charge some non-bank lenders apply when the loan is a higher share of the property value. Think of it as a risk fee, usually in place of mortgage insurance and varying by lender. It is often added to the loan, and it is generally not refunded if you pay out early. Some non-banks still use lenders mortgage insurance instead. How mortgage insurance works for self-employed borrowers, and when it applies, is covered in the self-employed home loan guide.
For self-employed borrowers it often comes down to a choice between a slightly higher rate with no risk fee at a lower loan-to-value ratio, or a larger loan that carries the fee. If you are unsure which tier your file would sit in, check eligibility before you compare offers.
Do non-bank home loan rates move with the RBA cash rate?
Non-bank home loan rates usually move in the same direction as the RBA cash rate, but not always by the same amount or at the same time. The reason is funding: the rate follows the funding, not only the cash rate. A bank funds much of its lending with deposits, which it can reprice on its own timetable. A non-bank pays investors and credit line providers, and what they charge depends on market conditions as well as the cash rate.
The Reserve Bank noted in 2024 that the banks' funding cost advantage is particularly marked against non-bank lenders with no access to deposit funding. For an existing borrower, that can show up in a few ways:
- A cash rate cut may be passed on in part, in full or later, depending on what the lender's own funding costs have done.
- A cash rate rise is usually passed on, and a lender can also move rates when its funding costs rise without any RBA change.
- New customers and existing customers can end up on different rates for the same product, as with banks.
Ask any lender for its variable rate history on the product you are offered, not only today's rate. The practical habit is to review the rate once a year and ask the lender, or a broker, to reprice it. How the funding chain behind a non-bank sets its costs is covered in where non-bank lenders get their money.
What protections apply to an owner-occupied non-bank home loan?
An owner-occupied home loan from a non-bank carries the same core consumer protections as a bank home loan, because it is regulated consumer credit. The same applies to a residential investment loan made to an individual. The lender must hold a credit licence, assess whether the loan is suitable under responsible lending rules and respond to a hardship request. Moneysmart's guide to problems paying your mortgage states that all lenders have hardship teams, and that the lender must write to you with the outcome within a set time.
Credit licensees must also belong to the Australian Financial Complaints Authority, which offers free, independent dispute resolution. Ask any lender to confirm its membership before you sign. From this year, the Consumer Data Right also reaches non-bank lenders, which makes product details easier to compare and, in stages, starting with larger non-bank lenders, lets you share your loan data with another provider.
| Rule | What it says | Source |
|---|---|---|
| Hardship response | A lender must write to you within 21 days with the outcome of a hardship request. | Moneysmart |
| Product data sharing | Product data sharing under the Consumer Data Right applies to non-bank lenders from 13 July 2026. | Consumer Data Right |
| Consumer data sharing | Consumer data sharing is scheduled to start from 9 November 2026 for the initial, larger non-bank lenders. | Consumer Data Right |
Sources: Moneysmart, Problems paying your mortgage, last updated 2 October 2026. Read 9 October 2026. Consumer Data Right, Non-bank lenders sector, no page date shown. Read 9 October 2026.
What happens if your non-bank home loan is sold?
If a non-bank sells your home loan or changes who services it, your contract stays the same. Non-banks routinely sell pools of loans to investors as part of how they are funded, and in most cases the lender keeps managing the loan and you see no change. If the servicer does change, you should be told who to pay and who to contact. Your rate, fees and terms carry over, and hardship rights travel with the loan.
How is a non-bank home loan different from a private mortgage or caveat loan?
A non-bank home loan is a long-term, regulated mortgage on your home, while a private mortgage or caveat loan is usually a short-term loan for a business purpose with an exit already planned. People search for all three under "non-bank", so it helps to separate them:
- Term. A non-bank home loan typically runs for decades. Private mortgages and caveat loans usually run for months.
- Purpose. A home loan buys or refinances the home you live in. Private lending is usually for a business purpose, such as a tax debt, stock or a settlement gap.
- Regulation. An owner-occupied home loan is regulated consumer credit. A business-purpose private loan usually is not, so the protections above may not apply.
- Exit. A home loan is paid down over its term or refinanced. A private loan is repaid from a sale, a refinance or a business inflow, by a set date.
How private lenders work and what they cost is covered in the private mortgage lenders guide, and the choice between a private first mortgage and a caveat sits in private lending vs caveat loans. For short-term business funding secured on property, see private lending. To compare what non-bank and private lenders accept across loan types, use the non-bank lender policy matrix.
A non-bank home loan does not have to be permanent. When your tax returns catch up or your credit file improves, the path back to a bank is set out in when to switch a self-employed home loan. More guides for owners weighing their options sit in the Business Owners Hub.
A non-bank home loan is same house, different lender rules. The lender does not take deposits, so its features, its pricing tiers, its fees and the way its rate moves can all differ from a major bank, while the core consumer protections on an owner-occupied loan stay in place. Compare offset, redraw, fixed options, the risk fee or mortgage insurance and the rate history before you compare the rate.
Key takeaway: check the features before the rate, ask whether the lender is an AFCA member, and plan when you would refinance.Frequently Asked Questions
A home loan from a non-bank mortgage lender differs mainly in its features, its pricing and how its rate moves, because the lender funds loans through investors and credit lines rather than deposits. Offset and fixed options can be narrower, pricing is usually set by risk tier, and some lenders charge a risk fee instead of mortgage insurance. The glossary entry on the non-bank lender explains the lender type itself.
Non-bank home loan lenders may charge lenders mortgage insurance, but many charge a one-off risk fee instead when the loan is a higher share of the property value. The fee varies by lender, is often added to the loan and is generally not refunded on early payout. The self-employed home loan guide covers how mortgage insurance works.
Non-bank mortgages on an owner-occupied home are covered by the same core consumer protections as bank home loans, because they are regulated consumer credit. The lender needs a credit licence, must meet responsible lending rules, must respond to hardship requests and must belong to AFCA. A business-purpose private loan is different and usually sits outside those rules.
Non-bank mortgage lenders usually follow RBA rate changes in direction, but not always by the same amount or on the same day. Their variable rate also follows what their investors and credit line providers charge, so a lender can move rates without an RBA change. Ask for the product's rate history before you sign.
If your non-bank lender sells your home loan, your contract, rate, fees and hardship rights stay the same. Selling pools of loans to investors is a normal part of how non-banks are funded, and the lender often keeps servicing the loan. If you later want to move, refinancing works the same way as with any other lender.
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