flagFounded: 1991, taken over by Westpac in 2008
businessOwned by: Westpac
monetization_onFunded by: Retail deposits and wholesale capital markets
securityLMI Provider: WLMI
account_balanceLender type: Non-Bank that’s owned by a Major Bank
Rams was originally a non-bank lender that ran into trouble during the GFC and was eventually purchase by Westpac.
They’ve continued to offer home loans catering to first home buyers while Westpac focuses on high net worth clients.
They have some unique home loans and credit policies combined with some good interest rates and great customer service thanks to their franchisee model, which means they are a viable option to the other banks.
How do Rams’ home loans compare?
They’re great at
- Customer service – you’re dealing with a franchisee, not a bank employee
- First home buyers
- Competitive low doc loans
- Don’t always require genuine savings
- Special solutions for borrowers with a bad credit history
- Assessing loans using common sense instead of credit scoring
- They’re good at construction loans for builders who are building their own home
- Guarantor loans for first home buyers
But they’ve got some drawbacks…
- Franchisees are mortgage brokers but they tend to recommend Rams over other lenders
- Unlikely to negotiate their interest rates
- Rarely competitive for loans over $1 million
- They don’t deal directly with mortgage brokers so most brokers work with a franchisee
- Their fixed rates are rarely market-leading
- LMI can be expensive
- It’s hard to say what Westpac’s plans are for Rams
What home loans types do they have?
Rams’ Low Rate Home Loan is a basic loan with no monthly fees and few features. It’s best for small loans or investors.
Ram’s Value Advantage Package is similar to a professional package offered by the major banks. You’ll get a tiered interest rate discount depending on the size of your loan and if you’re borrowing over 80% of the property value or not. It’s not bad for loans under $1 million, however other lenders tend to be cheaper for bigger loans.
Rams’ Fixed Rate Home Loan allows you to fix for up to 10 years, which is longer than other lenders but there tends to be a better offer out there.
Why happened to Rams’ Low Doc Loans?
Rams had a home loan known as the Rams self employed ‘lo doc’ home loan which was very popular with business owners.
It had a low rate and easy approval criteria, often only requiring an accountant’s declaration of your income.
However, this was withdrawn in April 2019 as Westpac, the owner of Rams, decided to no longer fund this product.
While there has not been a clear indication from Westpac as to why this decision was made, we believe it may have been the fallout from the Royal Commission.
Low doc loans have long been perceived by the public, government or media to be ‘liar loans’ that allow people who are not paying tax to get approved.
The reality is that self-employed borrowers often lodge their tax returns late, have complex financial situations or their historical tax returns do not reflect their current income.
Luckily, there are low doc solutions available with other lenders, where this suits your needs and so you can afford the repayments.
A franchisee vs a mortgage broker
Rams home loan centres are franchisees which can cause a conflict of interest.
After 2–3 years, you’ll often find that your lender has you on a higher interest rate than those that they’re offering to their new customers.
As mortgage brokers this is easy to handle, we can negotiate with the lender.
If they won’t offer you a better deal, then we can assist you to refinance.
However, the franchisees are tied to Rams and it’s a conflict for them to refinance a customer away from Rams to another lender.
So, if you choose to go with Rams you need to monitor your home loan rate every year and make sure that you’re getting the best possible deal.
Tip for applying with RAMS
Use RAMS’ Home Loan Application Form to prepare for your home loan application.
Note: This is the latest home loan checklist as at August 2017. Please refer to RAMS for their most up-to-date document requirements.
Compare Rams 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.