The time has come to start thinking about purchasing your first property. Most people begin the process by going to their bank and asking their advice; but did you know there are other options out there including non-bank lenders?

Finding a home loan can be an overwhelming experience, however, the most important aspect is to speak to a broker who will help you compare and research what the most suitable option is for you.

Firstly, a broker will look at all the different options that banks have to offer, including all the features and then make a list and think about the relative importance these features have to you and your financial position. We will also rank them in order of importance and use these as a checklist when comparing the different home loan options.

But what is the difference between a major lender and a non-bank lender?

A non-bank lender is a financial institution that does not hold an Australian Banking License and are not mutual, e.g. not a bank, building society or a credit union. Unlike banks, a non-bank lender is not allowed to accept deposits and then loan those funds to other customers, therefore they must source their own funding elsewhere.

Securing a loan with a non-bank lender can have its advantages. Due to their low overhead costs, they tend to provide competitive interest rates and limited fees. They also tend to be more lenient and have less stringent lending criteria (particularly good for individuals that may have a low credit rating or if the bank has declined a loan to you before). Non-bank lenders can also provide a more personalised service, as they can deal with each situation on a case by case basis and help with cases that may not have made it through the regular regulations.

So, what is the best option?

Everyone is different. No one has the same financial needs or situation so there is no right or wrong choice between major lenders and non-banks lenders.

Speak to a broker. We work with both major lenders and non-bank lenders and can provide options for your situation. Assess your financial situation; what it is now and any financial changes you may experience in the future. Getting a home loan is an important decision, so make sure you’re well equipped to make the decision.