Banks still hold the cheapest money in town. But they have also built the tallest walls. Many investors now hit the same barrier: the bank calculator says no, deals stall, and growth slows. The ones still moving forward have worked out how to use non-bank lending.
In APIA’s latest webinar, Kris Pedersen showed real deals where non-bank lenders stepped in. These were practical case studies of investors who got stuck with banks and found another way through.
Staged LVR to get in, then refinance
Example: a duplex bought for $735,000, $80,000 spent on renovations, end value $925,000. A bank capped lending at 70 percent LVR. A non-bank funded at 80 percent, sometimes up to 90 percent. Rates were higher for a short time, but once the valuation lifted, the investor refinanced back to a bank. Short-term non-bank money made the deal possible and created long-term equity.
The two step refinance (useful, not guaranteed)
Some banks allow a dollar-for-dollar refinance outside LVR caps even if the debt started with a non-bank. It happens in practice, but it is not a promise. Treat it as a bonus, not the plan. Policy can change.
When serviceability models shut you down
Banks discount rent, test at higher rates on principal and interest, and shorten remaining terms. A portfolio that is cashflow positive can look like a loss on paper. Some non-banks take a simpler view. They still haircut rent but compare it to actual payments. That shift can turn a “no” into a “yes” and free up borrowing power.
Development funding: count every friction cost
A bank offer can look cheaper on the rate and fees, then add cost through mandatory QS reports, repeated valuations, and refusal to accept a cheaper qualified builder. A non-bank may charge a higher rate but approve the cheaper builder after due diligence, skip unnecessary reports, and flag infrastructure issues early. That saves real money and time.
“Flexibility beats headline rate when the clock is running,” says Sarina Gibbon, APIA GM. “If you only think in terms of what the bank’s spreadsheet allows, you will never see the deals that are right in front of you.”
What to do next
- Review cross-collateralisation now so you can move assets quickly when a deal appears.
- Model a staged LVR approach and a refinance back to bank rates after value is created.
- Price friction: QS, valuation cycles, forced builder choices, and delays.
- Document the purpose of borrowing and loop in your accountant to preserve deductibility.
Watch Property Financing Strategies for When the Banks Say No on APIA TV. You will also find 300+ investor education videos to help you make better finance decisions.
This article is for general information only and is not financial advice. Seek independent advice before making lending or investment decisions.
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