Why Don’t People Change Home Loans?

Many Australian home borrowers are commonly voting Mortgage brokers as their preferred ‘go to’ person to arrange their home loans, with well over 50% of all home loans now written and managed by mortgage brokers. Brokers have greatly contributed to home loan competition through offering consumers borrowing options, which has in turn resulted in many borrowers saving thousands on their loan repayments. This activity has also contributed to growth in the market share of smaller, more cost-effective lenders- increasing from 21% in 2013 to a whopping 28% today. Yet many home loan borrowers are still shy of changing home loans to a more competitive product, so we thought we’d explore some of the more typical borrower misconceptions and reasons in this month’s newsletter.

The smaller banks don’t have banking suites like the Big 4 do:
A common myth amongst borrowers is that smaller lenders do not have proper or normal banking suites available eg being able to have your salary paid into a bank account and being able to pay bills from your internet banking etc. The reality is that most smaller lenders do actually have these facilities – and often offer more! The handful of boutique mortgage managers that don’t will most likely have a link to a major bank for their own banking needs, which then enables them to accept home loan repayments from borrowers.  

Smaller lenders don’t have branches:
A common statement we have heard - the reality is, when was the last time you ‘had’ to go into a branch? With all the banking technology we have these days, the need for having to visit a branch for one thing or another is practically defunct. The vast majority of banking practices do not require you to physically visit a bank in this day and age – on the rare occasion that a borrower’s personal presence is required, lenders without branches have methods to accommodate this.
Smaller lenders are not as competitive:
Quite the opposite in fact, it is the smaller lenders that are able to keep their own costs down and pass on savings to the borrowers that are winning home loan business. From a percentage perspective, they actually make more than the major lenders simply because they don’t have the overheads and it is all government guaranteed.

If you would like to know more, please feel free to call me on 0438 041 111 to organise a time for a confidential discussion and how we may be able to help save you some money.

As always, enjoy life, work hard, play safe and remember that we are always here to help you

‘Take the Confusion Out of Lending’ 


Peter Vinci - 0438 041 111