When you’re buying property, it can be easy to feel overwhelmed! There are so many different types of lenders to choose from.
The better your understanding of lender types and how they work, the more effectively you’ll be able to plan for home-buying success. You can learn the basics of the industries in ways that help you make informed decisions about your ongoing financial situation.
So what are the main types of mortgage lenders, and what advantages and disadvantages are they associated with? Here’s what you need to know.
Most property buyers are most familiar with bank lenders! This is a standard system with great security, as you’ll be working with an established and respected financial institution. You might even choose a bank where you already have an account!
Bank lenders often provide a wide range of loan packages, meaning that you can find a good selection of options to serve your needs. You can also often find a local branch, where you can visit if you need to speak to someone in person.
Non-bank lenders are privately owned companies, but they are still subject to all the important laws and regulations that control Australian credit transactions. This means you can trust your lender, even though you won’t have banked with them before.
One of the key benefits of non-bank lenders is that they are often much smaller business. This means that you’ll likely have access to better customer service and more personalised loan tailoring options. You might even get a lower rate!
Mutuals, or member-owned, lenders
Mutuals or member-owned lenders cover all the other lender types, from building societies to credit unions and member-owned banks. These are owned by members instead of shareholders and often offer very different loan options.
For some buyers, borrowing from a mutual lender may be associated with a sense of loyalty to specific union or organisation. You’ll usually receive a personalised experience, often with great customer service provided.
Which choice is right for you?
Your lender and loan package are important. These decisions can affect your financial situation and home ownership journey significantly, so it’s important to make your choice wisely.
Before you commit to a loan or lender, think carefully about what you need and what’s important to you. Don’t be afraid to ask questions and shop around to find the best deals as they relate to your property you want to buy.
Sometimes, choosing a loan or lender can feel impossible on your own! When this is the case, it can be helpful to seek guidance and support from a professional. A mortgage broker can help you evaluate your options and make a strong decisions that plans for now and the future in the most effective way.
Need help choosing the right lender and mortgage deal? Contact the skilled and experienced team at Our Top 10 for the best mortgage brokers Melbourne has to offer.