How to find a good home loan lender

Taking out a mortgage to buy a home can be a difficult task. You may end up spending as much time looking for a lender as you do searching for a property that meets your needs. But what exactly constitutes a good lender? And how do you find one?

The qualities that comprise a “good” lender are often subjective. Of course, there are certain characteristics that might make one lender more appealing than another - some may tout low interest rates, while others spruik cashback offers or other enticing incentives.

However, these aren’t the only factors that should be considered when choosing a home loan provider. 

A good lender is one that can provide suitable loan terms that meet your financial needs, while delivering a customer experience that you feel comfortable about. After all, you could be dealing with this very same lender for up to 30 years.

What to look for in a good mortgage lender

A good home loan provider will be straightforward with customers about their lending policies and repayment requirements. Typically, when a lender assesses your loan application, they’ll look at your income, savings and credit score in order to recommend a suitable loan. 

A lender may offer different types of home loans, but they should be willing to explain which of those may be more suitable for you and why. Ideally, they should give you enough information to decide if the loan matches your needs, rather than having you sign up for a specific loan without any consideration for its suitability. 

Mortgage lenders shouldn’t be solely focused on approving applications. A good lender won’t pressure you to take out an unaffordable loan, as this would go against the prudent lending regulations they’re obliged to adhere to.

A good mortgage company may offer a loan repayment schedule that’s comfortable for you financially and determine how much flexibility you have and what your options are in case you face any financial difficulties. For instance, they may allow you to make interest-only repayments for a short while or discuss how you can maintain repayments without affecting your household expenses.

While lenders are not required to notify customers when they report missed repayments to the credit agencies, a good lender might warn you when that’s likely to happen and help to avoid future recurrences.

How to select a good home loan lender

When you’re applying for a home loan, you may be overwhelmed by the number of lenders to choose from. It may seem like they’re all the same, but each one usually offers a specific set of services to suit different borrowers. So, how can you identify a good home loan provider?

• Comparing interest rates offered by different mortgage lenders can be a good starting point, as the interest rate impacts how much you will need to repay.
• It’s also important to scrutinise other aspects of the lending process. For instance, you may consider borrowing from your current bank or financial institution as you already know how they operate and the customer service they offer. Mortgage lenders derive a lot of their business from referrals, so you could ask your friends and family members about their experiences with different lenders. Alternatively, you can consult a local mortgage broker, but remember that they may have a list of preferred lenders from whom they get commissions.
• A good mortgage company will endeavour to keep borrowers informed about important loan milestones and interest rate changes. Observing how a prospective lender communicates with customers may also reveal a lot about that lender. Arrange a call, send an email and start a conversation with potential lenders to judge their responses. If your conversations leave you feeling unsatisfied, they may not be suitable for you.
• You can compare mortgage lenders based on their reputation, credibility and expertise by checking online reviews and analysing RateCity’s Real-Time Ratings™. Most rating systems only compare products a few times a year. This is problematic because banks and lenders are constantly changing rates, conditions and other loan features and borrowing terms. RateCity’s ratings system is updated daily, allowing you to compare products based on the most up-to-date information at hand.
• In Australia, all lending institutions must have a credit licence. You can verify that the lender you select has an Australian Financial Services (AFS) licence by checking the Australian Securities & Investments Commission’s (ASIC) professional registers.
• Consider comparinga number of different lenders to determine if they’re a good fit for you and your needs using RateCity’s home loan comparison tables. Use filters to narrow your search and specify the loan terms you’re seeking.

Compare home loans in Australia