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Home Lender
It’s a jungle out there with the banks and non-bank lenders competing hard for your home loan business. The trouble is choice can create confusion for some, but the reality is that the banks and non-bank lenders provide perfectly viable loan products. The challenge is to shop around for the right home lender, which provides the best mortgage for your circumstances.
Banks
On the whole, Australia’s banks are considered to be very secure given their relatively strong performances through the GFC. The banks provide a wide range of home loan services and flexibility for a broad range of home loan customers.
That said, banks often have high overheads (staff, branches and so on) and these costs are often reflected in their fees and home loan interest rates.
Non bank home lenders
For the uninitiated, a credit union is a cooperative where members are customers and shareholders. They are non-profit organisations, and as a consequence will often offer competitive loans – they will also offer other banking products such as cash accounts and so on.
Building societies, like banks, secure their funding mostly from customer deposits, and like credit unions, their customers are also members.
While the interest rates of the non-bank home lenders are very competitive, they are also starting to offer more bells and whistles, such as bonus interest on savings accounts, credit card fee waivers and discounts on insurance products.
It can also pay to weigh up the service levels and flexibility offered by a non-bank home lender and how it can suit your particular financial needs. For instance, non-banks are often worth considering if you have a poor credit rating or a tainted financial history.
Yet it’s fair to say that in the aftermath of the GFC some borrowers are still wary about dealing with a non-bank home lender. However, all lenders are governed by the National Consumer Credit Code, which has been in place since 2010. The Code ensures that credit providers disclose your rights and obligations, in the form of a written contract, during any credit arrangement such as a home loan. In other words, the code aims to provide robust protection for consumers.
