Thursday, 6 December 2012

Banks versus non-bank lenders

Something like 90% of all new mortgages in Australia at the moment are being signed with the major banks.  It doesn’t make a lot of sense to me, as people complain constantly about the level of customer service provided by the banks.

So, why would you consider a bank for your mortgage financing?
  • Their ability to offer greater non-advertised discounts for attractive business
  • Cash back mortgage brokers offer further discounts on bank products
  • Banks seem to offer better fixed rates for large % fixes (the non-bank lenders are advertising low fixed rates at the moment, but they generally seem to be for <50% fixed and <75% LVR)
  • Their additional package features
  • The breadth of their other services – e.g., private banking (see my post later in the month on this)
If you don’t want to deal with a bank, why not a credit union/building society?
  • They offer more personable service – often they only have a few staff that you will get to know by name
  • They have a good range of low fee banking products
  • They offer low interest rates and fees on personal and car loans, credit cards, etc., which are generally more competitive than the banks
  • They can have very attractive home loan rates