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Finding a home loan and choosing the right product is a challenging task that overwhelms many people.

Traditionally, peoples’ first thought was to ask their bank.

Since deregulation there are now many different bank and non-bank lenders competing and offering home loans.

So what’s your best option for a home loan – a bank or non-bank lender?

Let’s take a step back.

A good lender is a good lender either way and will have the products to show for it.

A bit of homework ensures you find a good lender with great products.

We’ve all been groomed to shop-around on interest rates, but the most important aspect is to consider the features and service on offer – especially post-sale service and help.  The cheapest rate overall won’t necessarily mean the best product to suit your needs.

Here’s our tip:

  • Make a list of the various home loan features being offered by various lenders.
    • N.B. focus on product features, not interest rates.
  • Consider their importance to you and your financial position.
  • Rank them in order of importance.
  • Use this checklist to refine your search when comparing home loans.

Of course, that means considering non-bank lenders.

Related Reading: 'Customers give less fees a big high-five'

What is a non-bank lender?

Simply, a non-bank lender does not hold a banking licence.  Is that good or bad?  It doesn’t matter.

The oft-stated concerns about non-bank lenders are unfounded and home loan lending is a level playing field.  Bank and non-bank lenders alike are bound by the same laws, rules of operation and governing legislation for such things as transparency and information.

Non-bank lenders source their funds from Australian finance wholesalers who may not have a retail presence and can piggy-back on ATM networks for customer security and banking experience.

Bank versus non-bank lenders – here are the pros and cons.

Non-bank – Pros

Many non-bank lenders are family businesses who have a vested interested to work hard and provide you with a tailored home loan solution and great personal service.

  • Very competitive, flexible interest rates, often the cheaper option.

  • Flexible, adjustable lending criteria.

  • Low fees and ongoing charges.

  • Innovative borrowing solutions.

  • Tailored, niche products.

  • Personal service.

  • No expensive overheads.

 

Non-bank – Cons

Some non-bank lenders may be more vulnerable to changing economic and political conditions.  If they are a young business, simply ask them how these challenges are managed.

 


Bank – Pros

Banks are some of the oldest organisations in Australia which can offer a sense of security for some people.

  • Easy access due to existing relationship with other finances.
  • Extra level of regulation through the Australian Prudential Regulatory Authority (APRA).
  • Sense of security.

 


Bank – Cons

  • Less personal, slow service – sales pitch.
  • Standard, less flexible products.
  • Strict lending criteria.
  • High fee structure.
  • Outsource a large quantity of work offshore.

 

Am I protected?

The home loan industry is governed and regulated by the following bodies:

  • Consumer Credit Code for transparent disclosure of information.
  • Australian Securities and Investment Commission for irresponsible and misleading conduct.
  • Credit Ombudsman Service for independent dispute resolution.
  • Banking and Financial Services Ombudsman for unresolved complaints.
  • Australian Prudential Regulatory Authority for ensuring a company has honoured its commitments and obligations to customers.

It’s about what’s best for you

Finding the best deal and a great home loan is about doing some homework and speaking to the right people for expert, professional advice.

There is no definitive answer as to who is the best provider of home loans, as no two borrowers are the same.  A good lender is a good lender, meaning you’ll get a great home loan and service from those organisations that are responsible operators and have peoples’ best interests at heart.

Look for the following:

  • A lender who is helpful wants to talk and listen to your needs.
  • A lender who will use your information to tailor a strong home loan solution that will achieve your short-term and long-term financial goals.
  • A lender who is open, up-front and transparent about rates and fees.
  • A lender who offers a choice and range of home loan solutions.
  • A lender who is flexible with great service during the life of your home loan.

Related Reading: 'Unlock your home loan and save.  Here's the key'

Let us show you

A simple conversation about your home loan could improve your financial position and lifestyle at the same time.

At Loan Avenue we know one size doesn’t fit all.  It pays to have a conversation with a real a person who wants to hear your story and run through some different scenarios with you.

It’s just one of the many features and benefits included in a tailored home loan from Loan Avenue – affordable home loan solutions for everyday Australians like you.

Let us show you.  To make an appointment with one of our experienced and accredited finance professionals call 1300 56 26 28 today or leave a message here.