Non-conforming lender Pepper Home Loans has made substantial changes to its product range in a bid to conserve its available funding, improve its margin and reduce risk.On Tuesday Pepper sent out a note to brokers outlining a number of changes. It has discontinued its Xpress and Mega Xpress loan products.It has reduced its maximum loan to valuation ratio, changed its fee structure, cut out a 12 month rate discount and also cut out a loyalty bonus.Pepper chief executive John Empey said the Xpress and Mega Xpress loans were sold to near-prime credits and were the products that earned the lowest margin in the Pepper range. Empey said: "We took the view that we should not be selling low-margin products when there was so much uncertainty about our cost of funds in future."Pepper funds through warehouse facilities and securitisation. Its last securitisation was in March when it priced a AAA tranche at 19 basis points over swap and paid an average price of 48 basis points over swap.Empey said: "We would not get anything like that today. Our plan is to slow the business down a little."Pepper has taken its maximum LVR down from 90 to 85 per cent. Empey said some other non-conforming lenders had reduced their maximum LVR and Pepper had followed suit to avoid being exposed to adverse selection.Another reason for reducing the maximum LVR is to reduce the overall risk of the loan book - an important consideration for investors in any future securitisation.Pepper has also made its LVRs hard capped, which means that fees and other costs cannot be capitalised above the maximum. All capitalised charges must be accommodated within the 85 per cent LVR.Customers will no longer be offered a 12 month discount of one per cent on their non-conforming and low-doc loans. The one per cent loyalty bonus, for borrowers whose loans pass three years, will no longer apply.The completion fee has been changed from a flat rate of just under $900 to a one per cent of the loan value on loans up to 80 per cent LVR, and 1.5 per cent on loans between 80 and 85 per cent LVR.Empey said: "We will reestablish a lot of these things when the investment market gets back to more normal levels. But now it is not prudent to be out there offering discounts."Empey said there was still plenty of activity in the market. "Our applications are lower than a couple of months ago but there is still significant demand."