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Squirrel launches no-fee personal loans

Adviser Squirrel Mortgages has launched a no-fee loan product for homeowners looking to renovate and improve their properties.

The adviser has started the roll-out of its "Homeowner’s Loan" product, which will provide up to $70,000 of financing to Squirrel customers. The product is aimed at owner-occupiers rather than property investors.

Loans will be funded through Squirrel's peer-to-peer lending platform by retail investors, according to the company's marketing manager Marita Kerry.

Kerry said the product, to be launched next week, was New Zealand's first no-fee personal loan: "As far as we’re aware there’s no other loan in the market that gives homeowners this flexibility and the ability to get stuck into a home renovation as quickly and easily as this product allows." She described the proposition as a "consumer finance product that allows homeowners to tackle a renovation without having to talk to the bank".

The loan can be used for renovations, upgrades, and other big purchases needed to improve a home, such as new kitchens, bathrooms, or swimming pools. Customers will receive a rate of 7.95 percent p.a.

The first year of the loan is structured with interest-only repayments. Following the first year, customers can consolidate the loan into their mortgage, or convert it into an amortising term, Squirrel said. Owner-occupied properties will be required as security for loans above $20,000.

In marketing materials sent to clients, Squirrel's John Bolton said it expected the loans to receive strong demand from peer-to-peer investors: “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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