What’s the difference between home loan lenders?

Should you choose a home loan from a bank, a credit union, a building society or a non-bank lender?

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The difference between home loan lenders

Banks, building societies, credit unions and non-bank lenders – they all offer home loans, but do you know what the difference is between these types of financial institutions?

It’s important to understand a lender’s approach to mortgages before you can work out whether it offers the most suitable home loan for you, so let’s take a closer look at what each type of lender offers to home loan borrowers.

Banks

Banks, particularly the “Big Four”(CommBank, Westpac, ANZ and NAB), are the major players in the Australian home loan market. In fact, around 50% of Australian mortgages are held with either CommBank or Westpac.

The vast majority of Australian banks are well-established financial institutions that offer a wide range of financial products, including everything from credit cards and transaction accounts to home loans. One of the main advantages of borrowing from a bank is ease of access, as it allows you to bundle a range of financial products together with the one institution. There’s also an added sense of security, as banks must abide by the Consumer Credit Code and are also regulated by the Australian Prudential Regulatory Authority (APRA).

However, you may be able to find better interest rates and lower fees elsewhere. You might not receive the same level of personalised customer service from a bank as you would from another lender.

Compare home loans from big four banks

Building societies and credit unions

Although building societies and credit unions are different to banks, they’re not classified as “non-bank lenders”. This is because, like banks, they are Authorised Deposit-taking Institutions (ADIs), and are regulated by APRA.

Unlike publicly-listed banks, which are run to generate profits for shareholders, building societies and credit unions are run for the benefit of their members. Rather than passing on profits to shareholders, building societies and credit unions aim to pass profits on to members in the form of better interest rates, lower fees and improved banking products.

Based on a mutual ownership or customer ownership structure, building societies and credit unions require you to become a member (usually for a nominal fee) when you take out a home loan. They generally offer a similarly broad range of home loans to the major banks, and they can often also provide lower interest rates, reduced fees and more personalised customer service than larger lenders.

Non-bank lenders

A non-bank lender is a lender that does not hold a banking licence. In other words, a non-bank lender offers home loans to consumers but it is not a bank, building society or credit union.

Non-bank lenders are privately owned financial institutions, which means they can generally offer competitive interest rates and fees when compared to the big banks. They have to abide by the Consumer Credit Code and their actions are overseen by the Australian Securities and Investments Commission (ASIC), so you can rest assured that it’s safe to borrow from a non-bank lender.

Non-bank lenders tend to have less strict lending criteria than major banks. They may also offer niche-market loans or mortgages that can be tailored to meet your specific requirements.

Compare home loans from non-banks lenders

Which lender is right for me?

The right lender and home loan for you really depends on your personal situation. You’ll need to consider your financial circumstances, borrowing requirements, desired loan features and a range of other factors so you can find a home loan that meets all your needs.

Start comparing home loans now

Rates last updated October 19th, 2019
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
2.98%
4.35%
$0
$395 p.a.
90%
Pay no application fee and fix your interest for 3 years with this ANZ package home loan.
2.99%
4.46%
$0
$395 p.a.
95%
Lock in a discounted rate for 3 years and have the option for interest only repayments. $2,000 cashback offer for eligible refinancers.
2.93%
3.75%
$0
$395 p.a.
70%
2.88%
4.34%
$0
$395 p.a.
90%
Special discounted rate for first home buyers. Start your home buying journey with 2 years of fixed repayments at a competitive rate plus package discounts. Available with a 10% deposit.
3.24%
3.28%
$0
$0 p.a.
80%
Get a low variable rate from a ANZ and save money with $0 application or ongoing fees. Requires a 20% deposit.
3.28%
4.88%
$0
$395 p.a.
90%
Competitive, fixed investor rate with principal and interest repayments and package discounts. Available with a 10% deposit.
3.29%
4.85%
$0
$395 p.a.
90%
3.23%
4.29%
$0
$395 p.a.
70%
3.20%
3.24%
$600
$0 p.a.
80%
A home loan with no ongoing fee and a redraw facility that you can borrow up to 80% LVR.
3.35%
3.36%
$0
$0 p.a.
70%
A competitive, discounted variable interest rate for home buyers.
2.98%
3.85%
$0
$395 p.a.
95%
Low deposit package loan with a range of discounts. Rebates for eligible refinancers and new borrowers.
3.44%
5.12%
$0
$395 p.a.
90%
Get 5-15% discounts on insurance products with this package loan from CommBank. Available with a 10% deposit.

Compare up to 4 providers

Rates last updated October 19th, 2019
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
2.84%
2.80%
$0
$0 p.a.
80%
Owner occupiers looking to refinance can get one of the lowest rates in the market with this variable rate mortgage. $0 application fee and $0 ongoing fees. Refinancers only.
3.09%
4.26%
$595
$0 p.a.
95%
A low 3-year fixed rate with the option to split your loan for free.
3.59%
3.79%
$599
$10 monthly ($120 p.a.)
55%
A competitive rate offered to self-employed borrowers.
3.24%
3.20%
$0
$0 p.a.
80%
Athena offers one of the lowest rates in the market for investors looking to refinance their mortgage. No ongoing fees and no application fee. Principal and interest repayments. Refinancers only.
3.32%
3.71%
$0
$395 p.a.
90%
New borrowers or refinancers can get a discounted rate with this package loan.
3.12%
3.32%
$599
$10 monthly ($120 p.a.)
80%
This is a competitive, flexible variable rate suitable for borrowers with a good credit history. Borrow up to 80%.
3.09%
4.39%
$595
$0 p.a.
95%
Borrow up to 95% LVR of the value of the property you're buying and pay no ongoing fees.
3.09%
4.52%
$595
$0 p.a.
90%
Investors can take advantage of a short term fixed rate with no ongoing fees.

Compare up to 4 providers

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