Wave Money has established a new warehouse funding facility with an Australian bank – its third secured since the non-bank lender started lending operations in November 2021.
Wave Money managing director and founder John Flavell (pictured below) said the new warehouse facility will continue to power Wave Money’s growth trajectory.
“The additional facility is a significant next step in our growth plans and enables us to further expand the range of mortgage solutions we provide,” said Flavell.
With non-banks largely relying on the professional markets for funding, finding additional lines of credit has become increasingly important.
Flavell said access to funding is “critical” as without it, “you can't meet anyone's needs”.
Having just one funding warehouse, which is a line of credit that a lender uses to fund loans to borrowers, means the non-bank lender operates on limited parameters.
“This might mean that you're limited in the amount of money you can lend, the loan-to-valuation ratios you can offer, or whether you can meet the needs of self-employed borrowers,” said Flavell.
For Wave Money, adding a third warehouse to its facility has expanded the breadth of people’s needs it can meet.
“By having multiple warehouses, we have a much larger range of options in terms of the solutions that we can provide,” Flavell said.
“We can now offer loan-to-valuation ratios as high as 85% without LMI, loan amounts of up to $3 million, and a more flexible approach to income assessment. This allows us to meet people's requirements from a product and policy perspective.”
In a challenging economic climate, many people with non-standard financial situations struggle to get loans from traditional lenders. Wave Money is a non-bank lender designed to help these borrowers.
Flavell said these borrowers often fell into three camps.
The first group of borrowers are self-employed people, whose personal and business finances are often intertwined. Traditional methods of income verification, such as two years of full financials, do not fully reflect the income of self-employed individuals.
“We provide a simple means of income verification for these borrowers, which is especially helpful for small and medium-sized self-employed businesses,” Flavell said.
“The second group are employees who may have been in their role for a shorter period of time, and they may be on probation. Many bank and non-bank lenders won't include that income or they will significantly discount or shade the income and that knocks a lot of people out from a servicing perspective.
“We take a far more commercial approach, and many brokers will us that if it doesn't service with Wave Money, the loan probably isn't going to service elsewhere.”
The last group of borrowers are people who need to consolidate debt.
This can be beneficial for them because it allows them to roll all their debt into one loan with a lower interest rate, which can make it easier to manage and pay off.
“We also offer cash-out loans, which allow borrowers to access the equity they have built up in their property for any worthwhile purpose, such as funding business acquisition and growth, funding renovations or broader investment,” said Flavell.
Officially launching in March 2022, Wave Money is a broker-exclusive non-bank lender that focuses on building relationships with brokers to make it easy for them to help their customers.
Flavell said that “now more than ever” borrowers needed the assistance that mortgage brokers deliver and this was reflected in the growth in home loans settled through brokers, currently at 67.2% market share.
“Brokers have the experience to navigate the complexity of the lending environment and ensure the borrower gets the solution that is in their best interest,” said Flavell.
“We believe that multiple channels create conflict and complexity and detracts from what we can deliver to brokers and their clients,” said Flavell.
“Our broker partners have a dedicated relationship team that are there to work with them on each and every file from application through to funding. If at any stage in the process a broker has any questions; they can pick the phone and have a discussion with the person at Wave Money that is responsible for the file.”
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