Liberty Financial Home Loan Review
Owned by: Privately-owned
Funded by: Institutional funding and wholesale capital markets
LMI Provider: Genworth and Self-Insured
Lender type: Non-Bank, Specialist Lender
Liberty Financial wasn’t the first specialist lender in Australia, but it was the first to rapidly grow through the use of mortgage brokers and became a market leader before the GFC.
Their founder Sherman Ma grew up in the USA, saw the success of specialist lending there and saw an opportunity in the Australian home loan market for people who couldn’t get approved by the banks.
Liberty now offers home loans, car loans, commercial loans, SMSF loans and a range of other products to people who are good borrowers but don’t fit with the banks. They’re also expanding with short term unsecured business loans through their FinTech partner Moula.
How do Liberty Financial’s home loans compare?
They’re great at
- First home buyers with a low deposit
- Home loans without genuine savings
- Loans for SMSFs
- Low doc loans and no doc loans
- People who have just started a business
- They can lend up to 95% of the property value
- Special solutions for borrowers with a bad credit history
- Specialist commercial lending and low doc commercial loans
- Assessing loans using common sense instead of credit scoring
- Car loans with a bad credit history or no tax returns
- Working with mortgage brokers
But they’ve got some drawbacks…
- Much higher interest rates than a bank
- Interest rates and fees are not always competitive when compared to other specialist lenders
- LMI is one of the most expensive on the market
- No branch access
- Due to minimal funding, loan products can be withdrawn if they are too popular
- They don’t do construction loans
- Conservative when assessing your borrowing power
- Bad market reputation, particularly prior to the GFC
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Is Liberty Financial reputable?
We’ve seen Liberty go through all sorts of court cases from ones with borrowers before the GFC through to a major dispute with a mortgage broking group Connective and even the owner Sherman Ma suing his own company due to a dispute with Macquarie bank!
But what does that mean for you as a borrower? Does any of that matter?
In this day and age, Liberty is a responsible lender and we are comfortable recommending Liberty where it is the best loan for our customers. As with any specialist lender, if you miss payments on your home loan, they’ll act faster than a bank to repossess your property.
Specialist lending is great for people who had something go wrong in their lives and they need someone to give them a second chance. It just doesn’t work for serial offenders who repeatedly have trouble paying their debts.
What are Liberty’s interest rates?
Liberty has a range of home loans which includes the Liberty Free, Liberty Sharp, Liberty Star, Liberty Nova as well as some niche products such as a No Doc Loan.
The pricing of these loans is a bit confusing for most people as it varies depending on whether your credit history is clear or if it’s less than perfect, what income evidence you can provide and how big your deposit is.
What this means is that in most cases we use a large table or software to calculate your interest rate with Liberty. That’s why you won’t see many interest rates published on their website.
Talk to one of our expert mortgage brokers and we can give you an interest rate quote for Liberty as well as other specialist lenders. Call us on 1300 889 743 or complete our free assessment form online.
But that wasn’t the rate I applied for!
Time and time again we confirm the interest rate that a customer is eligible for, we submit the application and then Liberty sends us an approval with a higher interest rate!
What they don’t tell customers and mortgage brokers is that there are many hidden conditions in their policy which cause people to be moved to another home loan product or to have a higher rate applied.
If your mortgage broker has a good relationship manager then they can negotiate with Liberty to get the original rate that was applied for.
Liberty client story: Glenda, NSW
Self-employed accountant Glenda decided it was time to expand her investment portfolio and put her money to work in a business.
She came across a courier business with strong cash flow and a solid management team and decided to take the leap.
She certainly had enough equity in her home to finance the business purchase and was going to be buying the business in her company name.
Commercial loans actually fall outside of National Consumer Credit Protection Act (NCCP) regulations and La Trobe is one of a few lenders that will approve a no doc business loan.
In order to qualify though, the cash out loan amount had to be more than the existing mortgage so that the majority of the loan was for commercial purposes.
Glenda was refinancing around $680,000 so she actually needed to cash out $350,000 even though she only needed around $100,000 to buy the courier business.
This meant that $350,000 was for business purposes and the remaining $330,000 was still tied up with her residential property, so La Trobe was able to approve the deal so she could buy the business.
Because she was borrowing less than 45% of the value of her property, she even qualified for a 6.65% interest rate, which is quite low for a non-conforming lender.
With the remaining cash out, she was even able to go on an overseas holiday with her children.
Compare Liberty to other lenders
Not sure which lender is right for you? Our Home Loan Experts can help!
Talk to one of our mortgage brokers by calling us on 1300 889 743 or complete our free assessment form.