Types of Lenders
Lenders can come in different shapes and sizes and if you’re wondering what the difference between each of them are, we’ve listed them below to help you get to know what’s available in the market.
You may be most familiar with this type of lender and may even have an account with one. Banks can offer the advantage of combining a range of financial products when you take out a loan, giving you the ease of access to different options. The experience and service you receive may vary between banks, so it can be a good ideato consider this when comparing investment loans.
Non-bank lenders do not hold a banking licence and are privately-owned institutions, yet they are tightly regulated just like other credits transactions in Australia. Sometimes people assume that their lender for something as big as an investment loan needs to be a bank, but this doesn’t always have to be the case. With the rising number of non-bank lenders, more people are choosing to go with one because of the personalised service that some offer. Non-bank lenders can also have the flexibility to offer more competitive rates, fees or features that give you a variety of options to suit your investment needs.
Mutuals (Member-owned lenders)
‘Mutuals’ are owned by members instead of shareholders. Building societies, credit unions and member-owned banks fall under the banner of member-owned lenders. Like non-bank lenders, people also choose to go with these type of lenders due to the personalised service they receive.
What is the difference between a bank, building society and credit union?
Just like banks and non-bank lenders, building societies and credit unions also provide a variety of loans. However, their main distinguishing feature is that they each operate differently.
As building societies and credit unions are owned by their members, their profits are returned as financial benefits to their members. These financial benefits could include more competitive interest rates.Banks on the other hand are usually owned by shareholders, passing their profits onto them.
Another main feature of building societies and credit unions is that once you have become a member with one, you get a say in how the lender is governed or operated, giving you the chance of a customer service that is more tailored to your needs.
You may have had an experience with one or more of these lenders over a long period of time, but they may not always have the right investment loan for your needs. That’s where a mortgage broker comes in handy as they work with different types of lenders – you’re left with a better choice of finding that right investment loan.
Before you begin your property investment journey, speak to your Aussie Broker who can help you navigate the lender market and find the right fit for your investment property goals.
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- Chapter One : Things to consider before investing in property
- Chapter Two : Determining where to invest
- Chapter Three : Investment Properties by Dwelling Types
- Chapter Four : Finance for Your Investment Property Purchase
- Chapter Five : How to Invest in Property
- Chapter Six : Adding Value to Your Investment Property
- Chapter Seven : Positive and Negative Gearing
- Chapter Eight : Getting Your loan
- Chapter Nine : Selling your Investment Property