NZ: Squirrel launches fee-free personal loans

Squirrel Mortgages has begun offering a personal loan product to its customers which will have no fees; they claim it’s the first of its kind in the New Zealand market. The product is exclusively purposed for renovations and other property upgrades and is targeted at owner-occupiers as opposed to investors.

It will have an interest rate of 7.95% and the first year is structured with interest-only payments. Thereafter, the loan can either be added to the customer's mortgage or converted to a principal and interest (secured by the owner-occupied property if the loan value exceeds $20,000).

According to RFi Group data, 8% of borrowers report low fees were a reason they picked their lender for their most recent loan. A low-interest rate was considered twice as important as offering low fees (16%). However, mortgage holders, the target of Squirrel’s new loan product, place more emphasis on fees with 19% saying it factored into their decision to pick a lender for their mortgage.

The loan will be funded by peer-to-peer lending facilitated by Squirrel. John Bolton, speaking for Squirrel, said that the product is attractive to investors because “Homeowners tend to be responsible borrowers and the money’s being used for things for the house, meaning the risk to our investors is lower and most importantly we can make the terms of the loan extremely attractive to you, the borrower. There really is nothing quite like it and we’re super proud of being able to offer it to you.”

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