Banks Vs Non Bank
In recent weeks Australian banks have had some very bad publicity after a
spate of ‘extra-ordinary’ interest rate increases. Many people have gone out
looking for a non-bank lender to take their mortgage to. However the decision
to obtain a loan from a lender should really be based around the loan
specifications that they offer rather than who they are.
Bank lenders tend to have better loans for people who have a clean credit history and a stable history of employment. These people tend to take up an entire banking package including a home loan, bank account, credit card, insurance & any other banking products. Banks also tend to be more competitive for loans over $600,000.
The disadvantage of banks is that their service is sometimes slow and there is little scope flexibility to change the rules for a single borrower.
Non-bank lenders tend to have higher service levels and very competitive rates for loans in the range $50,000 to $1,000,000. In particular one of our non-bank lenders can give a market leading rate for people borrowing less than 80% of the property value and less than $600,000.
People whose financial situation does not quite fit the norm as well as those who are after the cheapest home loan available often opt for non-bank lenders.
While some borrowers maybe concerned about taking a mortgage from a non-bank, this is largely unfounded. Irrespective of who the lender is they are all governed by the new National Credit Code and need to have similar rules and consumer protection practices.
If a lender you have a loan through gets into financial difficulty then it is usually taken over by another lender and the process has little impact on the borrower.