Choosing Banks

Owning your own home outright at retirement is right at the top of lists of happiness and well-being.  One of the most important decisions you will make in achieving that is choosing banks.  Yet historically many Australians give this scant consideration.

Structuring your lending correctly and at a lower interest rate can save you over $100,000 in interest expense and enable you to own your home outright many years sooner.  Current record low interest rates and increased competition in the market place is your friend!

We are fortunate today to have a wide range of institutions from which to choose, from the ‘Big 4’, to international banks represented in Australia, to smaller banks and non-banking lenders. 

Market share for smaller lenders not associated with the 4 majors has grown rapidly over the last 4 years, with increasing competition driving value for customers and benefiting the retirement of average Australians.  The current Royal Commission into the banking industry is adding to these competitive pressures, with major banks losing reputation in the eyes of many of their previously loyal customers, who are now more prepared to look elsewhere.

Mortgage Brokers have been fundamental in this move to alternate lenders.  In the last 4 years alone, the share of broker loans concluded directly with the 4 major lenders has declined from 58.5 per cent to 50.7 per cent. 

At the same time the percentage of loans originated by brokers has continued to increase, now firmly entrenched over 50%.  It is interesting that whilst some sections of the media look at headlining problems in the broker industry, complaints about mortgage brokers account for just 1% of complaints to the Financial Ombudsman Service (FOS).

At Integrity Finance Australia we have seen a notable shift in client mind set, with clients increasingly likely to look at alternate lenders. 

Potential benefits of an alternate lender

There are several potential benefits associated with having your home loan with an alternate lender, including:

  • Money in your pocket.  Alternate lenders usually have smaller overheads, because they have fewer offices and fewer expenses when it comes to marketing and labour.  This should lead to lower fees and better rates.
  • Customer service.  Alternate lenders try to offer a more personalised service because they tend to have a smaller database.  Improved internet facilities and telephone assistance replace branches.
  • Policy differences.  Alternate lenders often have more flexibility in policy.  If your application is marginally outside major bank policy guidelines you may find an alternate lender will suit your particular needs and circumstances.

At Integrity Finance Australia we want to help you buy your home then become debt free as fast as possible.  There are pros and cons for both big banks and alternate lenders, finding the right deal for you is what’s most important.  You’ll be the one making the repayments, so you need to be happy with the rates, service and fees that are offered.  

Integrity Finance Australia– Changing Lives

Daryl Borden, your Dingley Village Mortgage Broker, Ph. 03 9511 8883 ACL 392184