3 types of lenders
You have a few options when it comes to the type of lender you’ll borrow from.
Let's look at three here:
- Mortgage brokers
- Credit unions
Unlike banks, credit unions are not-for-profit organisations. They are run specifically to benefit their members. You are generally required to become a member when you take out a loan, sometimes for a small fee, which can be as little as $10.00. Because they are run to benefit members, they can usually offer more competitive interest rates, lower fees and more intimate customer service. Like banks, they are also governed by the APRA code of practice.
Credit union lenders generally offer the following benefits:
- More competitive interest rates
- More flexible lending criteria
- Lower set-up costs and ongoing fees and charges
- A strong focus on customer service
You may have heard what we commonly refer to as the ‘Big Four’ banks and it’s likely that you already have a transaction account with one of them. But that doesn’t mean that you have to take your home loan out with them; you can explore your options. While the Big Four banks offer a wide range of products, such as loans, credit cards and transaction accounts, their interest rates can be less competitive due to their popularity. Banks operate for profit.
Banks offer the following advantages:
- They are well-established and hold the largest share of the home loan market.
- You may already be a customer of one of these institutions and this offers easier access.
- The Australian Prudential Regulatory Association (APRA) holds these institutions accountable for all financial promises they make.
A mortgage broker seeks, finds and compares home loan products from a vast pool of banks and lending institutions. They have access to the best deals currently being offered by the banks and will know where to look to find a solution that will be best suited to your needs. They are the go-between agent between the borrower and the lender. To avoid missing out on the huge benefits of using a construction loan it's essential that you choose a mortgage broker who specialises in construction loans and who understands the home building process.
Mortgage brokers offer the following advantages:
- They save you time by doing all the legwork for you.
- They have access to rates and terms you might not have known about.
- They negotiate the rate and terms on your behalf.
- You can choose a broker who specialises in construction loans (building loans)
Mortgage brokers can save you time by doing the legwork for you plus they’ll have access to rates and terms you might not have known about.
Mortgage brokers negotiate the rate and terms on your behalf and using a mortgage broker gives you the opportunity to use someone who specialises in construction loans.
Work with a specialist construction loan (building loan) broker who will find the best borrowing scenario for you based on your personal circumstances, saving you time, stress and ultimately, money.
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Home loans are like pigeons, you want to fly the one that gets home first.
- Natalie Stevens
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