Banks vs non-bank lenders
When it comes to borrowing funds for a home loan, there are a myriad of lenders your clients can pick from. Loan Market mortgage brokers work with both bank and non-bank lenders as they have different products on offer allowing them to cater for more of your client’s unique situations.
While different lenders (and banks) offer different home loan products, essentially the lending fundamentals are the same for every financial institution. Whether a home loan is taken out through a bank or a non-bank lender, in Australia, the same laws, rules and regulations still apply.
Choosing the right mortgage can be an overwhelming experience so it’s important for your clients to understand the different avenues available to help them make an educated decision.
Clients may find more comfort in a bank (especially if they bank with them already) as banks are generally more established institutions who hold the larger share of the mortgage market.
Banks, however, will generally have a stricter criteria, higher fees, and could offer the client a slower and/or less personalised customer service experience.
This type of lender typically offers highly competitive interest rates making it a cheaper alternative for the borrower with good financials. They can often provide options for borrowers who have a poor credit rating, are self-employed or have previously been knocked back by the banks, but usually at a higher interest rate reflecting the increased risk incurred by the lender. Also, the service a non-bank lender provides is usually more personalised and a better experience for the borrower.
However, non-bank lenders can have a limited product service available to the client and may be more vulnerable to economic situations.
Ultimately, everyone’s financial circumstances are different and choosing between a bank or a non-bank lender will come down to the client’s personal needs and unique financial situation.