Self employed? Less than perfect credit? A non bank mortgage can get you into this house in Perth when the big banks say no ... photo by CC user Bozotexino on wikimedia

Over the past decade, the Australian housing market has been opened up to private lenders after the step was taken to de-regulate the industry. Much confusion still reigns over what advantages that the new kids on the block bring to the table … what are the benefits of a non-bank mortgage compared to what Australians have dealt with in the past? This article aims to clear the air on this often confusing subject.

More liberal lending terms

After the 2008 financial crisis, the Big 4 tightened their lending criteria to protect themselves against high-risk borrowers, with the unfortunate side effect of squeezing out potential borrowers with less than perfect credit or a lower income than average.

Non bank mortgage lenders understand that otherwise responsible citizens make mistakes at certain points in their lives, which means that they are more than capable of taking on a loan that the big banks say that they cannot be trusted to handle.

In the same manner, with the proper structure, those of more modest means can realize their dream of home ownership; as such, non-bank lenders open a door to this opportunity that more conservative financial institutions would slam shut.

Competitive/lower interest rates than the banks

Before the banking industry was de-regulated, unreasonably high interest rates on mortgages were levied by a quartet of banks that were in a near monopoly situation. With the introduction of non-bank mortgage lenders to the mix though, lower interest rates were made available to all, and not just those with a perfect credit score.

While the Big 4 have adjusted by lowering their rates in kind, non-bank lenders still manage to charge rates that match or are even lower than the big guys on occasion. When combined with the advantages listed previously, going with a trusted non-bank lender can be the better move for you and your family.

Cut out the middle man (mortgage brokers) and save

When one attempts to get a mortgage with one of the Big 4 banks, the services of a mortgage broker are often required, forcing you to take on an additional cost of paying a middleman for the privilege of even gracing a corporate bank with your hard earned money.

For those that are comfortable with doing your own research, buying from a non-bank lender can be done directly, as most providers like State Custodians sell their services direct to the consumer. This reduces an often unnecessary hand in your back pocket, freeing up more of your precious cash for that all-important down payment on your very first property.