When it comes to borrowing money to buy a house or refinance an existing home loan most people think of the big Four as the best banks to approach. These banks have had a strong presence in the market place for a long period of time and have a lot of customers.

In the last 10 years many new non bank lenders have come into the market. During this time they have dramatically improved their business offerings, their levels of customer service and the types of products they sell.  For many people non-bank lenders have become the institution of choice to go to for a home loan.

There are three particular reasons why you should choose a non-bank lender for your home loan:

1. Their interest rates are very competitive with the big four banks.

In many cases non-bank lenders will give you a home loan interest rate better than the big four banks. Given the current competitive environment in home lending all the lenders have to offer very good rates to get your business. For the non – bank lenders the best way to compete is to offer the cheapest rate.

In addition, with non-bank lenders they promote their cheapest home loan rate throughout their advertising. With the big 4 you need to apply for a pricing reduction to get the best rate. Therefore with non-bank lenders what you see is what you get. All their advertising promotes their cheapest rate while the big 4 play “ducks and drakes” and you need to jump through hoops to get their cheapest rate.

2. They can usually provide a lending solution if you have some unusual circumstances.

Probably the best reason to use a non-bank lender is that they are flexible. If you have a set of circumstances that does not fit with the mainstream banks you can usually find a non-bank lender that will be able to provide you with a home loan.

There are many examples of this. For instance, you may have bad credit, no recent tax returns, or earn an income made up of a large amount of bonuses. If you have these type of circumstances then the big 4 will not give you a home loan but a non-bank lender will. The non-banks are very effective at addressing the needs of different niche markets.

3. Their customer service and post loan settlement assistance is a lot better than the big banks.

One thing I have found in trying to sort out issues with my customer’s home loans is that the non-banks are far easier to deal with than the big four. They have basic call centres which you can call and get problems sorted very quickly.

Also, if it is a major issue then the non-banks will refer it back to the broker who can then solve the problem. This allows the broker to remain in control of the relationship and means problems get sorted out fast.

Finally, given the competitive nature of home loan lending at the moment non-bank lenders have to find a way to stand out in a crowded market. To do this they need to offer either a very low interest rate, be able to offer a solution to various segments of the market or be very customer focused or a combination of all three. This means that as a prospective borrower you should include the non-banks on any list of potential loan providers or better still ask your broker.

If you wish to get more information on this topic give me a call on 0409 119 322.


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