Which lender should you use for your home loan? Most home buyers have no idea where to start! While looking at the interest rate is important, there’s so much more to choosing the right home loan.
Don’t rely on reviews of home loan products
We’re so used to relying on customer reviews everywhere we go in life, and in most cases these are accurate as we can compare to other similar experiences with similar products.
That approach just doesn’t work with a home loan!
- You’ll probably only apply for two or three home loans in your life
- You may only have experience dealing with one or two banks
- Who you deal with at a bank matters!
- The self-employed, first home buyers and builders have very different needs
- Banks get busy leading up to Christmas, Easter or the end of the financial year
- Valuations, documents being posted or ID processes are outside the bank’s control
- Government regulations cause a lot of complications and delays
In other words, most customer reviews blame the banks for problems that either would have happened with any bank or where the real issue is that they didn’t belong to that bank!
Which lenders did we review?
- Adelaide Bank
- ANZ Commercial
- Australian First Mortgage
- Auswide Bank
- Bank Australia
- Bank of Melbourne
- Bank of QLD
- Bank of Sydney
- BankWest Commercial
- Better Mortgage Management
- Beyond Bank
- Bluestone Mortgages
- Click Loans
- Connective Home Loans
- Credit Union Australia
- Defence Bank
- Fox Symes Home Loans
- Gateway Credit Union
- Heritage Bank
- Homeloans Ltd
- Iden Group
- IBM Commercial
- ING Commercial
- La Trobe FInancial
- Liberty Financial
- Macquarie Bank
- Me Bank
- MKM Capital
- MyState Bank
- Newcastle Permanent
- Pepper Money
- St George Bank
- St George Commercial
- State Custodians
- Suncorp Bank
- Suncorp Commercial
- Teachers Mutual Bank
Disclaimer: While most of these lenders are on our panel there are a few that aren’t as they don’t deal with mortgage brokers.
How did we review the banks?
We based our review on much more than just price. We wanted to focus on if they deliver a great result for their customers.
Competitive interest rates
We all love low interest rates! We didn’t just look at the price today. Instead, we looked at their historical pricing and if they tend to be competitive or if they lag behind the other banks.
What about specialist lenders? These lenders use a rate for risk model where different customers are charged different rates and fees. We looked at if they are charging fair rates for what they offer.
Flexible credit policies
Do they approve home loans for good people and decline loans for the right reasons? Do they see you as a human being or just a number?
Many of the major lenders use a computer algorithm called credit scoring these days. In these cases, we looked at if their credit score was accurate, if it discriminated against particular borrower types and if it could be overridden where it was clearly inaccurate.
Speed and reliability
If you’re refinancing, then you probably don’t mind if your home loan is delayed a few weeks. However if you’re purchasing, the same delays will cause a mental breakdown. In the worst cases, people miss out on their dream home because their bank is too slow.
Banks have special offers and get swamped by applications all the time so be aware that right now they may be slower or faster than we’ve assessed. What we’re looking at is if they tend to get things right or tend to let our customers down.
Reputable or dangerous
Every lender has a clause in their loan agreement that allows them to vary your interest rate.
The question is can you trust them?
The GFC was the perfect example of a time when the banks had the opportunity to gouge their customers. Which ones took advantage of their customers and which didn’t?
Some lenders also got slammed by the media and customers when in fact they’d reacted to a real increase in their cost of funds. The general public can’t always tell the difference, but we can!
This also takes into account if they’re genuinely there to help customers or if they’re genuinely there to help their shareholders! Customer owned banking gets a big tick in this area.
About the reviewer
Otto Dargan is the Managing Director of specialist mortgage broking firm Home Loan Experts. He’s won Australia’s Brightest Broker twice! That’s no mean feat considering there’s around 11,000 mortgage brokers in Australia.
Otto combines extensive mortgage broking experience, great contacts within the industry, property investment and a passion for helping customers to get a better home loan.