How to choose the right lender

September 21, 2016
Melinda Halloran

When it comes to selecting a mortgage, there’s no shortage of choice. So where do you start when choosing the lender that’s right for you?

Your mortgage is one of your biggest financial commitments, so it makes sense to take your time when choosing a lender. The process isn’t a one-size-fits-all approach and there are a number of reasons why you may want to choose one lender over the rest.

By working through your list of must-haves when it comes to borrowing, you’ll be able to identify a shortlist of lenders that meet your needs. From there, it’s a matter of comparing details such as fees, loan terms and interest rates to find the best deal.

Big banks vs smaller lenders

The big banks are often the first lenders that spring to mind when you are ready to take out a home loan. Choosing between a larger bank and a smaller lender can be a good place to start your decision-making process. 

Advantages of borrowing through big banks include a wide network of ATMs, local branch access and phone and online banking. Larger lenders can also offer competitive bundling deals, so if you have a credit card, personal loan or a car loan, you may be able to combine these to save on interest and fees.

An advantage of smaller lenders such as credit unions and mutual banks is that they generally offer highly competitive rates and fees, and some also engage in a number of community programs. However, these lenders may not have ATMs or a branch in your area, and in some cases their online banking platforms and apps aren’t quite as sophisticated as some of the bigger banks.  

What features do you need?

A good way to build your shortlist of lenders is to look at what home loan features they offer. When comparing lenders, ask yourself which features and services are important to you. These may include:

  • Offset account
  • Redraw facility
  • Local branches
  • Extra repayments
  • Competitive interest rates
  • Loan portability

The features you require will depend upon your financial situation. Your needs will undoubtedly change over the life of your loan, but remember that refinancing is always an option down the track. Some features do attract higher loan fees so in order to save money in the short term, identify the needs you have now and look for a lender that can meet these

Related: What home loan features do you really need?

Be thorough in your research

The more research you do, the more likely you will be to find the lender that’s right for you. Speak to friends and family about who they deal with. Ask them about their experiences and whether they’d recommend their lender. 

Go online and you will find a wealth of information about lenders. Look for testimonials, news articles and browse the each lender’s website to help you make an informed decision.

Additionally, try to also speak with a professional who has lending experience, as they will be able to provide you with on-the-ground insights. I deal with more than 20 lenders, which means I can help you to identify your perfect match. It’s important to look beyond advertised interest rates and I take the time to talk you through each option based on what’s most important to you.

– Trevor 

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Posted in: Home loans

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