Non-Bank Lenders Comparison

Rates and Fees verified correct on December 4th, 2016

Find out how you could benefit from a non-bank lender

Before the Australian banking industry was deregulated in the early half of the 1980’s, home buyers had only banks, credit unions and building societies to turn to when in need of a home loan. These resulted in many Australians with a low income or less than stellar credit history being denied the opportunity to own a home.

With deregulation came a number of non-bank lending institutions that were offering home loans at interest rates below what the banks were offering. This forced banks to also lower their rates, creating a competitive market for home buyers to shop for loans.

CUA Fresh Start Basic Variable Home Loan - Owner Occupier

CUA Fresh Start Basic Variable Home Loan - Owner Occupier

3 .89 % p.a.

variable rate

3 .94 % p.a.

comparison rate

Non-bank Home Loan

CUA Fresh Start Basic Home Loan offers a low interest variable rate with redraw facilities and no ongoing fees .

  • Interest Rate of 3.89% p.a.
  • Comparison Rate of 3.94% p.a.
  • Application Fee of $600
  • Maximum LVR: 90%
  • Minimum Borrowing: $10,000
  • Maximum Borrowing: $5,000,000

Compare non-bank home loans

Rates last updated December 4th, 2016.

Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Years Fixed (Owner Occupier)

Interest rate increased by 0.10%

February 29th, 2016

IMB Budget Home Loan - LVR <=90% (Owner Occupier)

Comparative rate decreases by 0.07% | Interest rate decreases by 0.07%

August 12th, 2016

Australian Unity Kick Starter Home Loan

Interest rate now 3.79%

August 15th, 2016

View latest updates

Jodie Humphries Jodie
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Australian Unity Kick Starter Home Loan
$0 ongoing service fees, maximum 80% LVR and a linked transaction account.
3.79% 3.82% $600 $0 p.a. 80% Go to site More info
Switzer Home Loan
No upfront or ongoing fees and a competitive variable rate for owner occupiers.
3.89% 3.89% $0 $0 p.a. 90% Go to site More info
IMB Budget Home Loan - LVR <=90% (Owner Occupier)
A competitive budget rate without any unwanted bells and whistles.
3.87% 3.92% $445 $0 p.a. 90% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Years Fixed (Owner Occupier)
Enjoy a low interest rate and borrow up to 95% (with LMI) of your home value.
3.69% 4.76% $0 $0 p.a. 95% Go to site More info
IMB Accelerator Home Loan  - LVR <=80% $300k+ (Owner Occupier)
A two year discounted rate which reverts to an ongoing life of loan discount afterwards.
3.64% 4.39% $445 $0 p.a. 80% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 1 Year Fixed (Owner Occupier)
Get a short term fixed rate for that investment property with no application or ongoing fees.
3.69% 4.87% $0 $0 p.a. 95% Go to site More info

What is a non-bank lender?

A non-bank lender is an institution other than a bank, credit union or building society that is offering loan products to consumers, including investment banks, mortgage originators, insurance companies, mortgage brokers and more. These lending institutions do not hold a banking licence, but they are bound by the same laws and regulations as banks are, as defined by the Consumer Credit Code (a governing agency of all credit transactions in Australia) and by the Australian Securities and Investments Commission (ASIC).

The Australian Securities and Investments Commission sets regulations requiring all lenders to openly disclose any fees or rates associated with their products and that this information is readily available to consumers. The difference in regulation is with the Australian Prudential Regulatory Authority (APRA) which oversees banks only to ensure that they hold to financial promises made to you.

Non-bank lenders are privately owned and not mutual, typically relying on wholesale sources to get their funding. Their services are limited when compared to those that banks offer, but do include basic and fully featured home loans, line of credit loans, low doc loans, reverse mortgages and bad credit loans. Some of the features offered by banks could be missed since there are no other types of services like credit cards or transaction accounts available with a non-bank lender.

What is the main difference between a non-bank lender and a regular bank and how will it affect me?

As a privately owned financial institution, a non-bank lender has more flexibility in the rates and fees that are offered for their home loans. This allows them to compete with the banks by undercutting the cost of their products. In doing so, the banks have to respond to the competitive market and lower theirs as well too.

This ability to set their own rates has helped the Australian home loan market respond to the needs of homebuyers by generating a competition in it. You and other consumers benefit by being able to find home loans from any type of financial institution with reduced fees and lowered interest rates.

What happens if a non-bank lender goes bust?

The dependence that non-bank lenders have on a steady economy make them more vulnerable during times of financial turmoil. This was seen when the housing and loan industry went bust in 2008, causing some Australian non-bank lenders to close their doors. If this were to occur with your non-bank lender they can’t force you to pay your loan balance in full. Also, you wouldn’t get a free pass on the balance of your loan. Your obligation would be to continue making repayments as normal. If ownership does change, the terms of your original contract will remain in effect.

Glenn Braganza

  • Glenn is the Chief Strategy Office of 1st Choice Financial, Concord, NSW.
  • Glenn specialises in mortgages, financial planning, self-managed super funds advice, and mortgages and insurance for medical professionals.

How do non-bank lenders work and how are they different to a regular bank?

The differences are slightly exaggerated - a lot of it is media hype. Most non-bank lenders get their money from banks themselves. They try to minimise costs and lower their overheads - then they’re in a position where they can try to beat the banks. The crazy part is that they beat the banks with their own money. They sell wholesale funds to these mortgage managers. The mortgage managers then package the funds and on-sell it to give you loans, and depending on the cost associated and the margin they can get, that’s how they make their money.

Why do you think non-bank lenders are popular?

The advantage is flexibility in rates, because they have a margin to work with, and they can go absolutely rock-bottom.

People also love their service. I started out at a non-bank, and they have a huge amount of clients. Clients don’t want to move from them, they don’t want to go to the banks. A lot of people go there because of a bitter experience with banks, and from a service level there’s an advantage there because they get funds at wholesale and sell it at retail.

At the end of the day there’s a service proposition there that people are happy about. A non-bank lender will work on the assumption that a customer thinks a bank treats them like a number, so they’ll go to a smaller lender, and that lender gives them good customer service. It’s a win-win situation for a client, and is a customer service proposition that banks may or may not have.

Non-bank lenders keep the banks honest. They act as a bank’s conscience in a way. If the banks get back into the state where they’re the only ones in the market, especially after the GFC, then you lose that edge.

Are there any disadvantages that you can see with a non-bank lender?

There could be inconsistencies in passing on the rate cuts and things like that, so it’s not always the case, because they get money from another source where they’re getting it at the same rate, and that stems from where they’re getting their money from. If they’re mortgage managers they’ll be getting it most of the time from the banks, but they could also get private funding and that process will be a bit more difficult, and the rate could be quite different.

What types of loans do non-bank lenders have?

  • Basic home loans. A basic home loan can be either at a fixed or variable rate but will not have any added features.
  • Full feature home loans. Full feature usually refers to the loan having added benefits such as a redraw facility and offset account.
  • Split rate home loan. This is a home loan where a portion of the terms are at a fixed interest rate and the balance at a variable rate.
  • Reverse mortgages. A reverse mortgage is designed for seniors and allows them to use the equity built into their home.
  • Bridging loans. A bridging loan allows a home buyer to continue paying a home loan on one property while waiting for a new construction to be completed, or to assist with moving into another property.
  • Bad credit loans. A bad credit loan is a home loan that allows for individuals who have a previous bad credit history to qualify. In most cases the interest rate will be slightly raised to make up for the extra risk.
  • Low doc home loan. Self employed individuals may have a difficult time obtaining a home loan due to a lack of paperwork supporting their income earned. A low doc loan measures their financial capability in a different way to determine eligibility.

How can you compare home loans from non-bank lenders?

You are going to be looking at the same features with a non-bank lender as you would with a bank when deciding between non-bank lenders. These include things such as:

  • Interest rates. Non-bank lenders must disclose their interest rate and comparison rate. When looking over the comparison interest rates make sure that they are for the same terms and for the same borrowing amount.
  • Fees. This includes application and settlement fees along with any monthly or annual fee. Also look at the fees for special features such as redraw facilities.
  • Features. There could be some features that you won’t find with a non-bank lender due to their lack of other banking products, but you should still check for flexible repayments, extra repayments and penalties, interest-only repayments and charges for an early payout. Other features to consider are portability, offset accounts and loan purpose.
  • Eligibility. Although non-bank lenders have more flexibility with qualifying individuals for a home loan, they are still bound to ensure that the terms will not put you under financial hardship. Check over your finances and expenses before hand and use a home loan calculator to make sure that your income will allow you to be eligible for a home loan.

List of non-bank lenders in Australia

  • La Trobe
  • Maxis loans
  • Nationwide Mortgage
  • Nationalcorp
  • Plan Lending
  • RAMS

Things to consider when getting a loan from a non-bank lender?

Due to the same regulations being imposed on non-bank lenders as they are with banks, there is not a higher risk involved with obtaining your home loan with a non-bank lender.

You should compare the home loans offered by non-bank lenders in the same way that you do with banks, looking at the interest rates, fees and features and finding the home loan that suits your needs. Take advantage of home loan calculators which can show you based on that criteria, and your desired home loan amount and terms, which home loan option gives you the most value.

Frequently asked questions about non-bank lenders

Are non-bank lenders regulated?

Yes, despite the lack of a banking licence, they are still regulated and held to the same standards in fair lending policies as banks are.

How is a non-bank lender different from a credit union?

A credit union is a member owned financial institution run by a board of directors while a non-bank lender is a privately owned institution.

Can I use a non-bank lender for any other banking needs?

Yes and no, though this depends on your non-bank lender.  Some will offer transaction account products, business products or credit cards, and some may not.
You would access your redraw account either online, over the phone or at the branch. They would then either issue you a cheque or deposit the money into your account for you.

Was this content helpful to you? No  Yes

Related Posts

This page was last modified on 12 September 2016 at 17:34.

HSBC Home Value Loan - Resident Owner Occupier only

Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.

ME Bank Basic Home Loan - LVR <=80% Owner Occupier

A low variable rate loan with no application or ongoing fees.

NAB Choice Package Home Loan - 3 Year Fixed (Owner Occupier)

Receive discounts on interest rates with the Choice Package. 250,000 Velocity Frequent Flyer point offer, conditions apply.

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

6 Responses to Non-Bank Lenders Comparison

  1. Default Gravatar
    Lin | May 11, 2016

    Hi Just wonder do you still lend to foreign investors?
    If you do, what kind of deposit I need to have please. thanks

    • Staff
      Marc | May 11, 2016

      Hi there Lin,
      thanks for the question.

      Each lender will have their own policy regarding foreign investors, with some not lending to foreign investors and others lending but sometimes with added requirements or restrictions. It’s best to compare loans and then contact any lenders you’re interested in borrowing from to see what their policy is.

      I hope this helps,
      Marc.

  2. Default Gravatar
    Fiona | September 11, 2014

    I HAVE TAKEN ON AS MY HOME A OLD CARAVAN PARK FROM MY DECEASED PARTNER. THE ESTATE SOLD OFF MUCH OF THE BELONGINGS TO SATISFY DEBT OWED. I TOOK ON THE REMAINING. THE PARK ITSELF IS OPERATING AND HAS GOOD EQUITY, HOEVER THE BOOKS DO NOT LOOK AS GOOD. looking TO REFINACE OR CONSOLIDATE MY HOME WHICH IS ALSO MY HOME BUSINESS THEREFORE BRINGS IN AN INCOME/RENTAL. THERE HAS BEEN PREVIOUS OFFERS OF $850,000.00 TURNED DOWN AND THE DEBT IS ARROUND $350,000.00.
    It IS THE ONLY FREEHOLD LAND ON THE SNOWY HYDRO KHANCOBAN PONDAGE AND BEING HOMEBASED I AM OPEN SEVEN DAYS A WEEK WITH 24HR AVAILABILITY.

    • Staff
      Shirley | September 12, 2014

      Hi Fiona,

      Thanks for your question.

      If you’d like to refinance with one of the lenders on this page, please click ‘go to site’ to submit an enquiry.

      If you’re not sure which lender to approach, I’d recommend that you get in touch with a mortgage broker. A mortgage broker is a home loan expert who can help you find the right loan for your situation.

      Cheers,
      Shirley

  3. Default Gravatar
    Bebe | January 27, 2014

    Will any of the lenders, consider a person over 50 for a homeloan. I have a deposit but will need to borrow approx $250,000 on a salary of $60,000.

    I am a university graduate with no debts who wants to work in NSW but only if I can buy a home.

    • Staff
      Marc | January 28, 2014

      Hello Bebe,
      thanks for the question.

      All of the lenders we spoke to regarding this same question last week said there’s no maximum age when borrowing for a home loan. If the lender feels that you satisfy their lending criteria they’ll approve the loan. You may wish to contact some lenders before making any applications and enquire as to their policies before making any formal applications.

      I hope this helps,
      Marc.

Ask a question
feedback