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Credit union home loans

Credit unions are financial institutions that are owned by members, not shareholders. They offer home loans that are often quite competitive versus the banks and are regulated in the same way.

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By

Richard Whitten

Edited by

Joelle Grubb

Updated

Fact checked

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Credit unions are smaller, customer-owned financial institutions operating in towns, cities and regions across Australia. For home buyers and property investors, getting a credit union home loan means banking locally and avoiding the Big Four banks while still getting a good deal on a home loan.

Because credit unions are smaller operations, it's a good idea to research one thoroughly before becoming a customer. But that's true of any financial institution.

Bank loans vs credit union home loans

Credit unionBig bank
  • Owned by customers. While bank profits are distributed among shareholders in the form of dividends, credit unions re-invest profits for their members. This means credit unions may offer cheaper services, or re-invest profits into community initiatives.
  • Owned by shareholders. Banks are run as for-profit entities with legal obligations to their shareholders. A big part of their profit comes from offering competitive services to customers, but they do not have the same customer-owned ethos as credit unions.
  • Limited branch networks. Credit unions and other customer-owned banks tend to be local institutions. Some cover states, cities or regions. But they don't have the same extensive branch network as the biggest banks.
  • National branch networks. Australia's Big Four banks obviously have national branch coverage. For borrowers who need in-person service, this is a big advantage.
  • Community benefits and support. While every credit union is different, they tend to put profits back into specific, local causes in the areas in which they operate.
  • Corporate social responsibility. Banks also have a range of causes they support, but these initiatives tend be broad and not local.
  • Specialised memberships. These days most credit unions are open to anyone. But some still serve specific professions, or will only lend for buyers in the area they operate in.
  • Open to all customers. The big banks don't restrict their customer basis depending on your profession.
  • Old-fashioned service. Credit unions tend to be local. You can get local service in your town, and their phone lines are usually staffed by locals too.
  • Banking apps. When it comes to online banking and apps, the big banks tend to have the best services.
  • Regulated like the banks. Credit unions, mutual banks and building societies are Authorised Deposit-taking Institutions (ADIs). This means they are covered by the Australian government regulations as publicly listed banks.
  • Stability. While Australia's credit unions are stable and regulated like the banks, the biggest banks are obviously the largest and most successful lenders.

To get more information about the various customer-owned banks (including credit unions, mutual banks and building societies), check out the Customer Owned Banking Association website. Of those, 76 are credit unions. There are plenty to choose from.

What are the benefits of getting a home loan with a credit union?

Go local

If you want to support a local institution rather than one of the Big Four banks, then a credit union is probably your best bet. It's the financial equivalent of shopping local.

The fact that credit unions often put money into local community projects and charities is another benefit.

Member benefits

Credit unions are run on behalf of their members. And many credit unions started out by servicing specific areas or specific professions. If you're a teacher, for example, you may find a teacher-specific credit union offers extra benefits suited to your work and finances.

Will I get a good rate?

Credit unions vary widely. Some of them offer very low rates that compete with the cheapest lenders on the market. And some simply don't. You really need to compare home loan rates and make sure you're getting a good deal.

How do I find the best credit union for me?

Finding the best credit union is a personal decision based on your needs and goals. The best credit union for a retiree in Newcastle could look quite different to the needs of a young property investor living in Townsville.

To find the credit union that works best for you, ask yourself the following questions:

  • Does it have the products you need? Some credit unions offer an extensive suite of financial products, from credit cards to home loans to insurance. Others may offer a more limited set of banking services with only a few home loans to choose from.
  • Does the credit union operate where you live? Some credit unions only operate in one town or city. You don't need to be living there to bank with them, of course. But if you want personalised in-branch customer service, you want to find a credit union where you live.
  • How does the credit union support the community and its members? Consider the credit union's community work, the projects it supports and the benefits it offers to members.
  • Customer reviews. Reviews from existing customers is a good way to gauge how good a credit union is, especially in terms of customer service.

Can I get a lower home loan rate with a credit union?

At Finder we track the market's lowest home loan rates every month. And lately, most lenders are offering quite competitive rates. There's very little distance between the Big Four banks, online lenders and credit unions.

We frequently find credit unions and small lenders offering some of the lowest rates around.

Getting a loan with a credit union doesn't mean you're guaranteed to get a better deal, but it doesn't mean you're missing out either. Once again, you need to compare and make sure you're getting a good rate.

To make sure you get accurate and helpful information, this guide has been edited by Joelle Grubb as part of our fact-checking process.
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Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise
Richard has written 530 Finder guides across topics including:
  • Home loans
  • Property
  • Personal finance
  • Money-saving tips
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