Better Choice shifts to become non-bank

Better Choice Home Loans has announced that global financial institution Goldman Sachs is providing it with a $500-million funding facility.

The residential mortgage warehouse facility has been secured through parent company BNK Banking Corporation, and will launch this month.

The funding facility has largely completed Better Choice’s transition from mortgage manager to non-bank lender, according to Better Choice executive director Allan Savins.

The drive behind the transition to a non-bank lender was to provide new products for brokers to increase their shopfront of solutions, from prime and near-prime to specialist loans, he added.

“This transition began with the backing of our major shareholder and publicly listed authorised deposit-taking institution (ADI) BNK Bank back in 2018, and then the May 2021 announcement of a prime residential warehouse for $250 million with Bendigo and Adelaide Bank, and now a specialist warehouse with Goldman Sachs,” Mr Savins told Mortgage Business.

Mr Savins said that having access to its own funding through the residential mortgage warehouse programs would provide Better Choice with greater control over pricing and home loan product design.

“While we still respect our existing funders, Better Choice aims to control its own destiny by being able to control service levels, turnaround times, pricing and policy on its own products,” he said.

Funding to support new home loan range

The funding facility will support the lender’s new specialist lending product range called the Better Choice Ultimate (to be released soon), which will be exclusive to Better Choice and its distribution partners, including brokers.

The range will include a prime alt doc home loan product with zero risk fees, with Better Choice offering retained developer stock as acceptable security on some products.

In addition, cash out is available for loans under $250,000 with up to 85 per cent loan-to-value ratios (LVR) without requiring documented verification as to how the funds would be used. The lender will accept the stated purpose on the application without further documentation substantiation.

Mr Savins commented that the establishment of warehouse and securitisation programs with Goldman Sachs and Bendigo and Adelaide Bank would support Better Choice’s growth aspirations, including being known as lender of choice for mortgage brokers.

He added that Better Choice is aiming to have a product solution available to accommodate all types of lending scenarios, regardless of the borrower’s circumstances, employment, or security type.

“We have significant funding available, with a commercial appetite to write the business, so we are excited that the market will resonate with what we have to offer,” he told Mortgage Business.

“Goldman Sachs is leveraging our distribution, underwriting and servicing expertise and working with them will allow us to access securitisation markets internationally faster to further diversify and strengthen funding sources.”

Earlier this year, BNK Bank reached an in-principle agreement to partner with Goldman Sachs to originate, fund and securitise mortgages for an initial term of five years.

Under the agreement, Goldman Sachs will provide funding and act as arranger, structuring agent and distributor, while BNK Bank will act as originator, service and trust manager for a securitisation program with an uncommitted facility limit of $500 million.

[Related: BNK Group signs first RMBS program]