- Posted 29 Aug
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We are all told to be cautious when thinking of switching from the big four lenders. But the truth is, the number of people that switch from these banks every day is rapidly increasing – and for a good reason.
During the Global Financial Crisis (GFC) a lot of people thought it was safe to stick with the big four banks, this includes ANZ and Westpac among others. As we’ve recuperated from the crisis, non-bank lenders have emerged successfully in the market. Today, 1 in every 3 Australians chooses to switch to non-bank lenders for their home loans.
What is Driving the Switch?
Most people switch because non-bank lenders offer more flexibility in the way of repayments. Non-bank lenders ask for less interest and are open to a variety of installment options. These are some of the things the big four don’t offer.
With rising financial pressures, this is exactly the kind of aide people need in this day. By switching to these types of lenders, you can cut down outgoing costs by a thick margin. Lower interest rates mean less expenditure and who wouldn’t want that?
Many of the non-bank lenders cut out extra costs by eliminating the use of the middleman, i.e. mortgage brokers. The big four do not offer this freedom.
You can do your own research, without having to rely on someone else’s words. This offers a senses of security, because without fraudulent mortgage brokers, you have less chance of being scammed. Of course, you may still wish to work with a professional mortgage broker, who can access both types of lenders and provide you with further savings.
Are Non-Bank Lenders Safe?
As to the question of safety with regards to non-bank lenders, they are still subject to regulations and rules, particularly if they want to stay in business. The Australian Banking and Finance Industry is strictly regulated by the Australian Prudential Regulation Authority (APRA) and Consumer Credit Code, which supervise all our banks, credit unions, credit transactions, and home loans etc. These regulatory bodies ensure the performance of all financial institutions and help create a safe environment for people looking to engage them.
Do Your Research
As they say, it’s better to be safe than sorry. Before you make the move to a non-bank lender, look around and find out what your options are. You have many options, but there is still the risk of a scam. Use all resources available to you and find out if the lender you’re thinking of switching to is open to negotiation, offers lower interest rates, is co-operative and responds to your queries in a timely fashion.
Know who you’re switching to
It’s important to know a little information about a new lender before you switch to them. Make sure to know their name, physical address and whether they are based in Australia or not. If they’re not based in Australia, they are not governed by APRA and that means trouble for you.
Before you refinance, conduct a background check on the lender. Things like bad press and unhappy client reviews are red flags and they should tell you everything you need to know about the lender.
If you have decided to switch, read the fine print carefully before you do so, as there could be hidden costs.
To know more about safe, non-bank lenders, have a chat with our experts today!