# Thoughts on non bank lenders? (not the big 4)



## matty77 (3 November 2010)

My home loan is up for renewal, currently with Adelaide Bank and my new variable rate will be approx 7.45% (which I think it pretty poor), checking other websites there are other options not from the big 4 that seem to be cheaper, eg: "Better Option - Reward Variable Home Loan" @ 6.37% with offset account, $120.00 yearly fee. 

I havent dealt with any non bank type lenders, what are peoples thoughts? What do I need to be careful of? I know you can get locked in and it can be expensive to get out of the loan if you want to, other than that I just cant seem to see a downside?


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## Mofra (3 November 2010)

I have never used a big 4 bank for home finance. Looking to refi an Inv. property shortly, leaning towards MECU as their combination of features & rates looks attractive to me.

Checking the ERFs/break costs, they are much lower than my last lender (Macquarie). No ongoing fees, even the fee free big 4 bank products charge relationship package fees to avail of the lower rates.


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## Knobby22 (3 November 2010)

To get a much cheaper rate with no fees and no big banks look at:

ME bank
Australian Credit Union - quite a good deal at present

or talk to the brokers Mortgage Choice, the only large independent guys left who will arrange a good loan for you.

Aussie Home Loans are now owned by CBA, RAMs homeloans by Westpac etc.


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## Runnamuck (4 November 2010)

I am a Mortgage Choice broker. 

You are correct you have to be very careful when assessing loans due not only to interest rates but also other costs such as monthly or annual fees and any deferred establishment fees that may apply.

At no cost to you we can compare up to 400 products from 25 lenders and work out based upon your requirements which will be the best loan for you. Here is a link to our website.

http://www.mortgagechoice.com.au/northernsuburbs1

Feel free to contact us as I am more than happy to assist.


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## RADV (4 November 2010)

I go though Resi and have had no problems. Recently sought to unlock some equity to buy some shares. Again, no problem, and all done pretty much over email.

I like that they have no ongoing fees, their rates were competitive at the time (assume they still are), and I have dealt directly with the same one person each time I have contacted them.

I'm not sure how it compares with other non bank lenders these days though. My dad uses Members Equity, I think, and he is also happy.


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## nukz (4 November 2010)

I up until recently had all my mortgages with one-direct and never had any issues. I dont see why you will see any difference unless you constantly talk with your lenders.

The finance you get is the same money no matter which bank/non-bank it comes from. So if you can get the finance at a better rate then why not


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## Greedy_Kev (12 November 2010)

I bought a place a couple of years ago and thought about a small bank, after seeing how high the big 4's interest rates where but after speaking to my mortgage broker www.shapehomeloans.com.au it seemed too risky and ended up with nab at and is now paying 6.44% which is lower than there advertised 7 something. so maybe if u can negotiate with the big guys and would be better off.


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## Bill M (13 November 2010)

matty77 said:


> I haven't dealt with any non bank type lenders, what are peoples thoughts? What do I need to be careful of? I know you can get locked in and it can be expensive to get out of the loan if you want to, other than that I just cant seem to see a downside?




Hi Matty, I've had non big 4 mortgages before. One company was BMC mortgages and I had absolutely no problem at all with them. On another occasion I did what someone else suggested and contacted a mortgage broker (at no cost). They have the ability to sniff out a good mortgages for you at rates and exit fees that you agree with. To me it was not important where I got my mortgage from, it was the whole package including the rates that was important. When I cleared those non bank mortgages there were no surprises and it was a more enjoyable than dealing with banks, cheers.


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## Greedy_Kev (13 November 2010)

Bill M said:


> contacted a mortgage broker (at no cost).




Correct me if i'm wrong but I dont think mortgage brokers ever cost money, they give u money for going with them(sometimes).

I heard of one exception from I think it was yellow brick road that charges u but never experienced it myself so dont quote me on that one.


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## Julia (13 November 2010)

Well, obviously mortgage brokers have to make money somehow.
If they are not charging you, the customer, where are they deriving their income?

Presumably from commissions paid by those institutions whose mortgages they are recommending to you.

Sounds just like the whole financial planners' debacle all over again, where the client's interests are the last consideration, against the high interest of the broker in obtaining commission for recommending the loan which pays them the highest rate of commission.

Note:  I've had nothing to do with mortgage brokers, so am simply suggesting the above as a logical consideration.  I am not alleging that it is necessarily so.  But if I were a borrower, I'd certainly be asking the broker how they derive their own living, and ask to see substantiation of what they say.


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## Bill M (14 November 2010)

Julia said:


> Sounds just like the whole financial planners' debacle all over again, where the client's interests are the last consideration, against the high interest of the broker in obtaining commission for recommending the loan which pays them the highest rate of commission.
> 
> Note:  I've had nothing to do with mortgage brokers, so am simply suggesting the above as a logical consideration.  I am not alleging that it is necessarily so.  But if I were a borrower, I'd certainly be asking the broker how they derive their own living, and ask to see substantiation of what they say.




Generally speaking, the same loans that the mortgage brokers can find for you are the same as the ones you can find for yourself. The advantage is that new ones come online that you don't know about and they can alert you to them and this could be of benefit to you. In all honesty there is nothing stopping you from getting a free quote from them and then sign up by yourself directly with whom they may have recommended but there would be no advantage in it for you as the fees would be the same with or without them. Mortgage brokers can save you time and alert you to a good product and for that I don't mind if they make a commission as long as I am not paying for it directly.

I had a very tricky situation one time. I was buying a property before I had sold the one I was living in. I did not want to lose the new property and I did not want to pay for a bridging loan at their exorbitant rates. I contacted a Mortgage Broker and told them of my situation and they lined me up with a Bank (one of big 4 this time) who could give me a Mortgage at normal rates. I would have been very hard pressed to find a loan like this myself. About 6 weeks after we moved into our new place I closed out that mortgage with minimal fees, all legal and all good, I was very grateful for that Mortgage Broker. Just an example how it can work in your favour.


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## Greedy_Kev (17 November 2010)

Bill M said:


> Generally speaking, the same loans that the mortgage brokers can find for you are the same as the ones you can find for yourself. The advantage is that new ones come online that you don't know about and they can alert you to them and this could be of benefit to you.




How does mortgage brokers make money then? i'm not a mortgage broker just a client of one as mentioned earlier. I'm still baffled how he got me a lower rate without charging me

also the rate that i'm paying is not even advertised online

PS my rates i believe is going up by something like 0.43% soon


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## doctorj (18 November 2010)

Greedy_Kev said:


> How does mortgage brokers make money then? i'm not a mortgage broker just a client of one as mentioned earlier. I'm still baffled how he got me a lower rate without charging me
> 
> also the rate that i'm paying is not even advertised online
> 
> PS my rates i believe is going up by something like 0.43% soon



Details vary by bank and product, but mortgage brokers make money as banks pay them commission for selling their product. Brokers earn a commission at close, then a trailing commission at the anniversary of the close (if it hasn't been repaid or refinanced).

Brokers have access to platforms that display products of a number of banks (and non banks) to ensure you get a product that meets your needs. Banks will often make products available to brokers that are not marketed to Joe Public for various reasons.


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## matty77 (18 November 2010)

Well not too happy with my current lender so going to go shopping next week. They havent given me discount on my rate, also refused to stop charging me the $10/month fee. I told them if they cant help me out on the fees I will leave, specially considering I also have a couple of savings accounts and credit card with same bank and also get fees on those. Not too happy with my finance broker either, I am highly suspicious if he even tried to get me a better deal.


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## matty77 (18 November 2010)

Would you refinance to save $1000.00 a year over a 3 year period?


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## Bill M (18 November 2010)

matty77 said:


> Would you refinance to save $1000.00 a year over a 3 year period?




Yes I would but not if it is going to cost me $3,000 to break my current contract. 

Work out the cost to break out of your current mortgage and work out the total cost of your new mortgage. Add the 2 costs together and if it is less than 3k then the difference of that is what you really save. Let us know what you decide, cheers.


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## Greedy_Kev (19 November 2010)

matty77 said:


> Well not too happy with my current lender so going to go shopping next week. They havent given me discount on my rate, also refused to stop charging me the $10/month fee. I told them if they cant help me out on the fees I will leave, specially considering I also have a couple of savings accounts and credit card with same bank and also get fees on those. Not too happy with my finance broker either, I am highly suspicious if he even tried to get me a better deal.




Hey make sure when u change u don't have to pay the exit fee, u can get the bank in which u are switching to, to pay it for u  maybe that will help.

humm i thought my broker was pretty good, if u want, its shapehomeloans


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