Busted: Top Myths About Non-Bank Lenders
When applying for a home loan, there are various lending options your broker will assess to determine what will suit your financial circumstances. While many prospective property owners will choose to use a mainstream lender, such as one of the big four banks, non-bank lenders are also an option to consider.
However, many people are unsure of this area of financial lending due to various myths floating around the market. While it's okay to use caution when thinking about your financial choices, it is important to be aware of all that is available to you.
Non-bank lenders are neither a bank, credit union or building society; they have their own funds and lend them out with a margin for profit. Throughout the industry, brokers work with both banks and non-bank lenders when finding a product that is right for you.
We have debunked four myths that surround non-bank lenders and have listed them below.
Myth #1: Non-bank lenders aren’t trustworthy
All non-bank lenders must abide by the same consumer credit rules and regulations as all banks. These include the Consumer Credit Code and the Australian Securities and Investments Commission, which require lenders to be transparent with fees, rates, and to make sure all information is made readily available to the consumer.
According to the research company, Roy Morgan, customer satisfaction of the personalised service offered by non-bank lenders was found to be substantially higher among smaller lenders than with the big four banks.
Myth #2: Non-bank lenders only give loans to people with a rough credit history
The clients of non-bank lenders come from all walks of life. A smaller lender may have a product to suit an individual’s circumstances when a big bank doesn't. However, non-bank lenders will only approve a loan if the application satisfies their criteria and requirements.
Myth #3: Non-bank lenders are expensive
Non-bank lenders remain an important part of the mortgage market, as they add competition and offer product alternatives in an area heavily dominated by the big four banks.
Non-bank lenders usually have smaller overheads due to fewer offices and expenses when it comes to hiring employees and marketing, meaning fees are lower, and rates are better. Non-banks can, therefore, offer significantly competitive rates in comparison to bigger lenders.
Myth #4: Non-bank lenders don’t offer a broad range of products
Non-bank lenders provide an extensive range of lending options, which include highly competitive variable and fixed interest rate loans, interest only loans, lines of credit, loans with and without annual fees, loans for self-employed borrowers and more. What separates non-bank lenders is their products can suit niche consumers that need a personally tailored approach rather than a one-size-fits-all one.
“Non-banks have an unrivalled ability to be flexible, and create product offerings that stand out on a broker’s lending panel,” says Advantage Financial Services general manager for distribution, Brett Halliwell.
At Select, we offer no-obligation, quality, and free advice to help you reach your financial goals. When tailoring a product to suit your needs, we sort through a wide range of products from both bank and non-bank lenders to find the one that is right for you. In the end, our service is based on what suits your circumstances. If you would like to arrange an appointment to discuss your options, give us a call on (08) 9417 3399 to meet with one of our friendly brokers.