Question: We have always done all our banking and had our home loan with the same bank but I am worried we are not getting the most competitive deal on our home loan. How do I go about checking out the deals available from other lenders? There seem to be a lot of new names offering home loans online but I am not sure if they’re safe or even competitive. What sort of things should I consider before switching to a new lender?
Answer: The vast majority of Australia’s home loans are with the big banks and there is a perception that even if their interest rates are higher than those offered by other lenders, they’re ‘safe’. However, with the Federal Government’s recent announcement that through the Australian Office of Financial Management (AOFM) it will invest through non-bank lending up to $3.4 billion in Residential Mortgage-Backed Securities this year – there has never been a better time to try a non-bank. The big banks have standard variable home loan rates up to 1.12% higher than the SV rates currently on offer from some non-banks and the gap between bank and non-bank mortgage rates has never been wider. There is a new generation of online lenders who can save you money by cutting out brokers and commissions. But the trick is to find a lender with the best deal that doesn’t cut corners on ongoing service. Check out a range of websites – both banks and non-banks before you decide who to do business with. Make sure the lender provides enough information online about their fees, features and interest rates to make it possible for you to complete their application form with all your questions and concerns answered.