Know your banks from your building societies? Don’t worry, you’re not alone. We’ve clarified a few things with a panel of our Aussie Brokers – professionals who deal with lenders, day in day out. If anyone knows who the banks, lenders and societies are, what they do and most importantly, how they can help you, it’s a broker. They give us the hard facts, in the simplest way possible.
Meet the panel
Catherine Dodd, Franchisee at Aussie Neutral Bay.
Catherine’s office is shortlisted as one of the top branches in Australia in the Australian Broking Awards in the New Office category.
Chris Antypas, Franchisee at Aussie Launceston.
Before Aussie, Chris worked for the big banks, so you get the insider knowledge.
Melanie Smith, Senior Aussie broker at Aussie Queensland.
After 7 years as an Aussie Broker, Melanie now trains the next generation of Brokers.
Banks. Lenders. Societies. A who’s who.
Starting at the very beginning, we asked the panel to explain what a bank was. Melanie was the first to point out the familiarity of this type of lender, “Banks are the big funding solution. These long-established institutions have maintained popularity through their accessible and secure offerings. They are part of our every day. From the moment you’re born, Mum pops down to open you an account.” But she’s also quick to add, being bigger comes with disadvantages too, “overheads costs can be reflected in their fees and the overall experience can often feel a little less personal”.
Otherwise known as non-bank lenders, these privately-owned institutions are neither banks nor building societies as they do not hold a banking license. But don’t let that put you off states Catherine, “they have to abide by the same laws, rules and regulations which govern all credit transactions in Australia. Their advantages are more competitive rates and more personal customer services.” But Chris isn’t so sure, “with over 10 years of experience in the industry, I’ve seen it evolve. It’s not just the banks have lost human contact. Small is getting bigger and the non-bank lenders are losing their personal touch too.”
Catherine explains, “building societies and credit unions differ from banks and non-banks as they are owned by their members. Rather than passing on profits to shareholders, they aim to pass profits on to their members in the form of better interest rates, lower fees and improved banking products”. But without big support behind them, they can struggle to compete with the big players she adds, “they can sometimes not be as competitive with rates because they have smaller funding bases.” Eager to praise their good customer services, Chris notes, “from their face to face values to the open design of their branches, everything in a building society has been considered to create a personalised experience. It’s no wonder people have a sense of loyalty towards them.”
Stability. Longevity and assurance. Surely banks are the clear winner here?
“Well actually, no” Chris replies, “banks misread the public when they kicked up a stink about tax.”
“I see a lot of resistance to the ‘big four’” says Melanie, “but when a customer comes in for a loan, first, I look at their needs, then I suggest the lender that’s right for them. I would never talk my customers into going with a bank if they didn’t want to, but I will show them the possibilities that choosing the right loan will offer. I see myself as the cushion on the uncomfortable couch! Going with a bank is the right option if it’s the one that suits your needs.” Chris takes the same approach, “Clients often come to us when they’ve had a bad experience with their bank. First, we work out what the problem is, and then we look at alternatives. If the right alternative for that customer is to stay with the bank – we can support them through that. If they’re just not happy about it, we’ll find the next solution.”
Where does that leave non-bank lenders and building societies?
All three Aussie brokers agreed that non-bank lenders offer a refreshing alternative to the big banks, but they also have shortcomings. “Non-bank lenders can chase good rates and often offer really competitive loans. But this also makes them inconsistent” explains Chris. “As a Broker, you are a bit more weary because you know that because they are smaller they are more sensitive to change.” Catherine doesn’t necessarily agree, “Aussie deals with the most established non-bank lenders and building societies. We can give people the confidence that if a non-bank lender is right for them, they are in safe hands.”
So who’s right for me?
“At the end of the day, the lenders are all very similar”, explains Melanie, “they all have investors at one end and customers at the other. They are trying to be everything to everyone, and when you’re everything to everyone, you’re not very good at any one thing.” Melanie goes on to explain that it’s not about picking out individual faults of each lender, “one will have the right offer to suit your needs and we need to find out who that is.”
Catherine believes the best results come with an open mind, “sometimes people come in knowing which lender they want, but it’s important to remember, that might not be the right option for their needs. I will always show them the alternatives and then weigh up the pros and cons of each one against their original intent.” For Chris, it all comes down to policy, “If the policy is right and the rate and timeframe fit, I will recommend it to my client. It’s my role to take the client on a journey, to show them the options and help them understand why it is the right option for them.”
Are there any watch outs to know about?
“Watch out for deals to entice you!” Warns Melanie, “they could look great now but look at the bigger picture, this quick fix might cost you extra in the long run.” Luckily, like all Aussie brokers, Melanie will be on standby with her bag of tricks, “if that lender is offering a great deal now, what if something changes down the line and they don’t offer it anymore? I’m looking at your situation now, and forever. So if something changes in your situation, I’m going to be able to find a solution in my bag of tricks.”
Even though the landscape of lenders may be complicated, there is a way of navigating it with simplicity.
1. Do your research and go to your Aussie broker with an open mind. Rather than overwhelming you with information, your Aussie mortgage broker will work through the different types of loans, features and options available – helping you compare and ultimately choose the most suitable loan.
2. If you are nervous of banks, don’t be – you may not like their policies but the one your broker puts on the table is going to give you the right loan. If you are nervous of non-bank lenders, don’t be either – Aussie works with responsible lenders.
3. And don’t be bedazzled by deals. Think about the long run and trust your Aussie broker’s judgement. Just remember, there is no right or wrong answer when it comes to which lender is right, it all comes down to which lender is right for you.
Aussie trained and accredited professionals have been trusted by thousands of Australians for over 25 years. To find out more, get in touch with your local Aussie broker.