Pros and cons of big banks vs smaller lenders

Hi guys, I'm a first time home buyer. I'm looking to split my mortgage 50/50 fixed and variable rates so I could convert my PPOR into an IP in the near future.

I've approached lenders directly with my stable employment, and the big banks like CBA, BOQ, ANZ are offering me the same 3 years fixed rates (2.19%) and the smaller lenders like auswide are also offering the same rates as well, who should I go with? Could I play off their similar rate offers and ask for some incentives to join them?

Having read this forum, I was wondering if using a mortgage broker would have gotten me better rates? The ANZ chap had told me pre-approvals through a external mortgage broker takes much longer than pre-approvals done directly, is that true?

Last question, I just saw a property I really like going to auction next week. Assuming I can't organise pre-approval in time for the auction and am allowed to go to the auction anyway (as I've cash), could I ask for a couple of weeks for the lender to process my mortgage approval? Thanks

 

For ANZ at the minute, it might well be quicker to go through branch but just make sure they're providing you a fully credit assessed pre-approval (and not a system generated approval) especially if you need it turned around in a week for auction.

You should get the same rates going through a broker or branch for the same lender, but a good broker will have dozens of options for you and might be able to turn something up that is a better fit/pricing that you have not considered.

On that note, is that an owner occupied 3 year fixed rate of 2.19% that they're offering you? (If so, it does seem on the high side). If you're looking at a 50/50 split (you'd want to explore why that split) then need to consider equal weighting to the variable pricing as that can vary significantly between lenders too.

 

My strategy with banks is have 1 or two major and one alternative ...... after GFC i was not happy with a major and I had everything with them. Over a year I took everything away from this major bank, then suddenly they com9eted hard to get me back!!

So now I have multiple banks, and the majors work harder to try and get everything back across to them. Which I would never do again. But don't tell them.

Tried brokers, wasn't happy.

Maybe it's me?

Oh and its not always about interest rates, service matters too. As does honest dealings.......

 

If you want the best outcome, use a decent broker, you'll thank me later

 

Same rates, possibly better. ANZ is competitive in fixed rates, not so on variable rates.

They take lnger with ANZ, yes, not so with other lenders.

What is more important, fast turnaround or sound advice and finance structuring considering your short. medium and long-term goals?

Finance is usually subject to 14, 21, or 28-day approval times as per contract.

 

Tried to use a broker during the first lockdown.

I got a very sad story about the end of the world being nigh, and although I got the impression I was the only active loan applyer for, I got some very slow service. Gave up.

Still don't quite get what a broker can do for me.

Tho I do get the feeling that the picking and choosing that brokers do ( cultural? ) doesn't help.

 

All professions seem to follow a 60/20/20 rule, 60% are average, 20% dangerous and 20% excellent, perhaps you got an 80%er?

If you have enough base knowledge then DIY may be possible.

Do you mean brokers will only work with people from their culture?

 

You don't know what you don't know.
Kinda like saying I had a bad experience with an independent mechanic once so now I only get my car serviced at the stealership. Where I likely pay more than double the cost for a service and have 1st year apprentices working on my car.
Most people don't use a broker until they need to.

 

Many professions have higher standards of excellence. Otherwise we would see lots of problems!!

But I think u might be right, that a high percentage are no good.

 

I would say that there is a culture of judging rather than service provision. And maybe that is also reflective of only wanting easy work?

Certainly my blue face didn't worry any one. The ginger beard does tho, and I do need to work on the tongue, at least with strangers.

 

I am obviously an idiot.

Hang on that is how the broker behaved. He suggested it was a bad time to buy and was VERY resistant.

On reflection, wasn't he the clever one!!

 

Who said you're an idiot? You don't know what a broker can do for you because you've never used or spoken to a decent one, how does that make you an idiot? Mindset is important, don't interpret everything as a personal attack.

Why would a broker advise its a 'bad time to buy'?
Sounds like you got an absolute dud, doesn't mean all brokers are like that. You tried using one yet you say there is a culture of judgement instead of service, based off your single experience?

Doesn't mean the OP shouldn't use a broker either. They would be well advised to use one instead of going direct.

 

Well my view is brokers are salesppl for others' products, and the good one / bad one debate really sheds light on that.

The hard thing would be to get service provided at a excellent professional level apparently a chance of 1 in 5. Then if the service is shrouded in conflict ( who pays the broker, commissions and kickbacks versus what is needed) then who knows what it's all really about.

The ONLY thing that I can see that is a benefit is the promotion of non bank lenders, but is that really the case? And of course I can't see how that benefits a customer.

So u make an assumption that OP would benefit from broker, perhaps why?

Maybe I am an idiot after all?

Certainly the bad time to buy comment wasn't well received, but was more a sign that broker couldn't be bothered than a deep analysis. He was very glum.

 

And what's a banker? A salesperson for one single lender.
Brokers provide Credit Advice not just what loan is the cheapest, your lack of experience with a decent broker shows in this comment.

The lender pays the broker, there are no kickbacks, kickbacks are illegal.
Broker's are bound by Best Interest Duty - this boils down to acting in the clients best interest when providing credit advice, every recommendation must be justified regarding why it's in the clients best interest vs other potential recommendations.
Bankers are not bound by Best Interest Duty so they really don't need to act in the clients best interest at all, and they can only recommend one lenders products.
This point highlights how the OP would benefit from using a broker just by the fact they are being provided a service by a professional that must act in their best interest vs one that does not.

From what experience you've had with brokers?
Do you know what rates and products are on offer from non-bank lenders vs what's on offer from major lenders? Some non-banks offer better products and rates, alternative policy's for certain income types etc. it's more than just the rate.
As I mentioned previously, you don't know what you don't know.

I don't assume mate, I guarantee that the OP would benefit from using a decent broker.
I'm basing that on being in the industry for more than 10 years helping people get better deals, grow their property portfolios and fixing bad structures created by banks.

 

I suppose so.

So buying a property involves too many with noses in the trough IMHO, people selling loans, selling insurance, selling buying, selling selling, broker here broker there.

Many so young that they think 10 years experience is impressive . Many quick to suggest customer experience not valid.

Defend them if u wish, guarantee that Ur service will fix up someone else's poor service, if u wish.

And good luck to u.

BUT they are not for me. There is an old saying, once bitten.

 

Most contracts have a settlement timeframe (eg. 30 days) this gives you time to arrange the finance, however the contract is not subject to finance approval when buying at auction.
If you did pay for the whole property with cash then you can be reimbursed by the lender, this is perfectly do-able as well.

You should consider a lender that offers fixed rate loans with 100% offset account where you can park the cash.

 

We tried to use our bank (NAB) to pull equity for a cosmetic renovation. 3 hours on the phone and they could only give us half of what we asked for. Went with a broker and she said the numbers are fine and will be able to get us sorted with a much lower rate. So all up with an extra $100k borrowing we'll only be paying an extra $170ish per fortnight.

Everytime I've dealt with a bank directly I come away frustrated. Thank God someone can deal with them for me.

 

Well I have heard brokers are useful for stepping around responsible lending rules.

Back to OPs topic, I have heard on occasion the big banks can lend where the smaller banks can't in some circumstances....... but thought that was temporary as the banks adjusted capital holdings? Or some such thing.

 

You only have to look at the number of bankers reported to AFCA to realise broker's make up only a tiny percentage of all complaints and instances of fraud being committed vs bank direct loans.
You must've had blocked ears when you heard that huh