Better Choice Home loan - Are they OK?

Discussion in 'Loans & Mortgage Brokers' started by Sachit Adhikari, 9th Feb, 2021.

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  1. Sachit Adhikari

    Sachit Adhikari New Member

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    Given my situation and requirements:
    - 400k Residential home loan
    - 2 years Fixed offset + variable after that
    - Ability to redraw etc

    My mortgage broker has recommended to. go with Better Choice Home loan. This is the first time I have heard their name and it's very hard to find info about them on the Internet. Does anyone have any experience with this home loan?

    Please advise.
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    https://betterchoice.com.au/
    They're not a bad lender by any means.
    Ask your broker why they're recommending them over other lenders, they should be able to tell you this easily.
     
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    My understanding is they're a mortgage manager which gives them a fairly diverse range of products to accomodate a wide range of circumstances. There will be things they can do that others can't, but there are many potential downsides to this.

    Overall there would be lenders I'd prefer to use if given a choice. Hence you need to understand why specifically this recommendation has been made.

    Given the product you've described (fixed with offset), I suspect it may be funded by Adelaide Bank. This raises the question, why hasn't the broker not recommended Adelaide Bank directly?
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The broker recommendation should explain the preferred lender, other options and why they recommend that lender. over other/s. Times have changed with credit advice.
     
  5. Sachit Adhikari

    Sachit Adhikari New Member

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    Thanks
     
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  6. Sachit Adhikari

    Sachit Adhikari New Member

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    yeah better choice home has better rates than Adelaide bank.
     
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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    The lower rate can come at some convenience cost.

    Many mortgage managers add a level of complexity to the approvals and maintenance process, but can also improve access to certain products and sometimes borrower types.

    For eg if you are looking to buy say 6 units on one title in a company name or corporate trustee ABL wont do it direct, yet one of their mortgage managers will.

    Pepper for eg wont do construction via their own brand, but will do so with their White label product. Also their own funding line wont do fixed rate loans, but they also do Fixed via ABL product.

    This confuzzles folks seeing 2.xx fixed rates on the Pepper retail website, but they dont read the disclaimer that funding is provided by ABL and is subject to ABL servicing...............


    ta
    rolf
     
  8. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Assuming youre talking about owner occupied 80% lend variable, yes Better choice currently has a great product, but Firstmacs 2 year onet moon special is 2.19%.

    If yoire comparing it to Adelaide bank, we'll they offer 2.05% fixed with 100% offset, which is better then Better choice.
     
  9. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Mortgage Managers often have very competitive rates, sometimes a little better than going direct to the funder. However I think the biggest benefit is they'll often have policies outside of the original funder.

    They do make me nervous though. When funding sources get tight and start to dry up, the mortgage managers are usually the first to feel it. The sources start to hoard money for themselves and the second parties can't renew loans. This can lead to defaults, which are passed onto the borrowers in higher rates & fees.

    It was a serious problem during the GFC and what was thought to be cheap money turned out to be very expensive. I think Australia has come through the pandemic quite well as an economy, but this is about as nervous as I've been since 2008.