Which Bank is Best for You? Australian Lender Tier List
Which bank is best for you? Whether you’re buying an investment property or whether you’re an owner occupier looking to obtain a home loan. So before we kick off into the banking system, let’s take a look at the overarching bank, which is the Reserve Bank The Reserve Bank is Australia Central Bank, and it essentially lends money to our banks here in Australia. It adds .25 of the Sent interest rate on the current Reserve Bank rate and lens that money out to our banks, but then learn it to the end customers the banks also obtain money by being a deposit-taking institution which simply means our banks received money from people like you and me who put their money into their savings account and then they can lend money out to other people in the market. That’s obviously a very simplistic approach to Australia’s banking system, but let’s break down all these different types of Banks and how they can help you in your situation. Ian we’re going to take a look at the big four Banks. We’re going to take a look at the mid tears. We’re going to take a look at the Neo and digital Banks. And finally we’re going to look at the non-bank lenders. So let’s kick off with the big four Banks here and Australia that is CBA Westpac and a b and a and z now these four Banks really dominate the Australian Market that had the most lending and they have the most customers. They have a lot of branches which you can physically Rock up to and they’re pretty diverse in the products. They are. Fun and the tech that they have online so these banks are typically heavily audited and have tight lending restrictions. You might have noticed if you’re going for Lending with your homeowner or an investor that they’re looking at your expenses and your serviceability and quite a lot of detail at the moment. Now the real reason to go with these big Banks is due to their system and backing and everyone has the perception that they’re almost too big to fail in any event. The base are typically going to be propped up by the
STATE BANK OF INDIA
government. And so it’s very important. Unlikely that if you take a line out from one of the big banks that it’s likely to be foreclosed on you, which means you would have to pay the bank back and potentially fire sell your property. One of the great things about this Banks is the systems and assurance that they can provide you. So if you’ve been a longtime follower of our Channel and learn I have typically dealt with CBA, so there are Australians biggest bank. And the reason we love C VA over Westpac and a b or a and z is because of their digital platform so their net banking platform is world-class. Ass it’s easy to navigate you can have unlimited offset accounts against your home loans and we’ve just found their system and infrastructure to be the best as I’ve dealt with the other Banks platforms online CBA has shown through the crowd and that’s definitely returned in their share prices as well, you know being a great bank and turning gray profits for themselves. So when it comes to being a lender and dealing with the bank, the most important thing here is to get a lending specialist that understands your situation now, we’ve been very lucky at CBA. And we had great contact with the lending specialist who’s been there over 10 years and her name is Sara and don’t go calling CBA and asking for Sarah. There’s thousands of people with a work for this Bank. The most important part here is that you find a lender and a lending specialist That’s within the bank. If you’re going to deal with them directly that this is here situation analyzes all the number and gives you real feedback as to what you can do in terms of taking the next steps. There’s nothing nothing worse than dealing with a lender and giving them all of your information. Ian and getting mixed responses around your lending capacity around what information needs to provide and that’s one of the great things we found about CBA is when we dealt with our learning specialist directly that we got the answers quickly and as long as we turned and provide the information in a quick manner, so we typically try to provide information within 24 hours CBA was outstanding in terms of their service and also fairly competitive on interest rates. Now, let’s talk a little bit about interest rates with the big four Banks. They’re typically going to be slow. Oh to decrease their rates and quick to up the rates as interest rates rise. The big banks are not going to be the cheapest in terms of interest rates, but they’re also
not going to be the highest. They know that the bulk of people want to join them and use their lending services. So they’re in the middle of the market when it comes to interest rates. The great thing that we found is that yes, they’re more flexible in terms of products. So that might be an advantage to go with one of the big four Banks. So if you’re looking for a surance and it’s your first or second investment purchase, Maybe Take a look at one of the big four Banks if you just a bread-and-butter homeowner, or you’re looking to purchase your first investment property. Let’s jump into the mid tier Banks. So this is the section. Second section of Banks and it’s not one of the big four but they’re well-known institutions. Now some examples of this might be Bank of Queensland suncorp Bankwest Heritage and Macquarie. So these are really well known Banks and financial institutions. They’ve got some brand names but they don’t sit up with the big four now, why might you want to look at one of these mid-tier lenders like an eye on G or a Suncor and the real reason is because they might give you a little bit better serviceability if you’re looking to Stand by an investment property or your bank with them before so you already got there already understand your history or finally there might be a reason that that individual bank is slightly better than the other banks at one aspect of lending. I’ll give you a few examples. So the bank of Queensland is really well known for having great bank branch managers that you can go in and talk to you personally. So maybe you’re not used to digital banking or dealing with everything online or over the phone and you like to have face-to-face conversations. Contact so Bagel quiz and might be a better bang for you. If you want to talk to a bereavement branch manager. I’m really sit down in person and go through the paperwork there. Some other examples are Bankwest unknowns, maybe have better lending capacity now Bank West is a subsidiary of CVA, but Bankwest might have better lending capacity, which means you can borrow more money and potentially make a larger investment purchase now Heritage or a bit more of an older bank and they deal with paper still so not online forums and online signatures, so Where that but Heritage of 92 bit maybe help under occupies get into the property market. So if you’re an occupier, maybe Heritage is a better bank for you now as an investor, they might be more limited in their lending capacity. But when you are if you have unique
circumstances where on casual income or part-time wages, or you’ve just gone to full time, sometimes these Banks can be a little bit more flexible. Now. I also want to throw in credit unions into this level of banks. So there’s a lot of banks meteor. And Banks and Credit Unions that fall into this category way too many to name on this list, but the real real takeaway point for talking about this meteors and Credit Unions is they can potentially help you based on your specific situation. So maybe have a chat to a mortgage broker. If you want their opinion. I’ll do some research online and take a look at the mid tier Banks and Credit Unions the might be able to help you in your personal situation interest rate is not the only Factor you need to worry about you need to look at how the main can give you a certain product and how they can give you a certain. In your maybe interest-only period or help you get from your second to your third and fourth property. If you’re looking to grow an Investment Portfolio, it’s all well and good to get your first line and be happy with it. But if it cuts you with the knees and doesn’t allow you to get more lending then maybe it’s not the right investment loan to go for you in the first place. Now, let’s jump to stage number 3 in terms of our banking tier list and that is Neo and digital Banks. So digital banks have been on the rise in the last few years and they really tailored towards homeowners and Pies that I have a very simple structure now, I’m going to put a bit of a warning out there. If you’re an investor and you’re looking to grow an Investment Portfolio, these banks are typically really rigid in their serviceability and really rigid in understanding your financial situation. You might jump through a few of the questions that they ask up front and have a chat to be lending specialist online or fill out the forms in this case because there Neo base it typically you don’t get much phone
interaction and once you jump through a few Hoops, you might find out that due to their lending restrictions, they really Want bread and butter homeowners and then I’ll really really looking for people who have three four five investment properties because that complexity is difficult for the bank to manage and they typically just want the simple loans. So if you’re a homeowner and you’re looking for a great rate, the digital Banks might be best for you in this situation. These digital base are looking for typically lower than 80% I’ll be ours and I know Athena has an example as you lvr gets lower as you pay more off of your loan the interest rate Falls as well. Lots of these Neo and Digital Banks offering crazy interest rates at the moment around the 1.9 or 1.8 percent Mark for owner occupiers who have say a leverage and lvr or a leverage to Value ratio of 65 percent or less now, obviously the interest rates will Creek up created Creek up creep up the higher your lvr is so if you’re getting towards the eighty percent marking a new paying market rate and a bit higher interest rates, but this might be the pick for you. If you’re looking for a digital experience. You can send them your bank statements and send.
All right for you and let’s take a look at our final category in our banking T list which might be the best for investors who have hit their lending capacity. So that is non-bank lenders here within Australia. So we’ve gone through the big four Banks we’ve gone through mid tears. We’ve taken a look at me o / digital Banks, the final banks in Mighty list are actually not banks at all. Then non-bank lenders and whatIs the typically private lenders that have a pooled fund and they lend that out at a higher interest rate the most popular ones here in Australia our first Mac Liberty Latrobe and pepper money. So those are typically the big four plays in the non Banks face. Now the reason they’re non-bank lenders is they have less lending restrictions on them, which means they can give you a higher serviceability in layman’s terms and simple English. They can give you more money to go and buy an investment property then the big four bank or a meteor. Bank typically could now you’ve got to be careful here. Don’t take on that debt unless you’re comfortable in the investment that you’re buying and you’re comfortable in the cash flows as well. So although you have greater lending capacity. This is great if you’re comfortable with that and you’re comfortable with Investments, but can it can be risky if you’re an owner occupier is looking to get their first property and has struggled with a big for bank or a mid-tier bank and has decided to go with an en
banc lender to get into their first home. These guys typically charge a lot higher interest. Traits than your average bank. So an average Bank could be charging the mid to high 20s or low 3% at the moment. And these Banks can be charged these non Banks. I should say she could be charging anywhere between four to six percent depending on your circumstances. You can also do different types of loans with these Banks like you can with the big banks in low-doc loans and that will allow you to again reach more capacity in terms of your borrowings. Now for me how I’ve structured our property portfolio and this is where the real gold is if you’re going to take anything away from this video. Work with the big four and the media Banks to begin with so typically the big four banks are going to have the tightest lending capacity and the tightest restrictions on what you can borrow then once you maximize your capacity with the big four Banks, maybe look at the mid tier Banks and see if you can get more lending through those parties and then look to move to the non-bank lenders, which will have the highest interest rates, but the maximum lending capacity. The reason you want to do this is because I love the comfort and Assurance you get by starting at the top of the tree with the big four Banks and Then working your way down to slightly higher risky lenders with higher interest rates to grow your property portfolio over time as you become more of a established investor or what they call a professional investor in some capacity and you get a greater understanding of your your debt and your equity and how to manage your cash flows wolf. So that’s a massive breakdown of the banks here in Australia. If you have your lending sorted and you’re ready to buy and you’re looking to buy within the browser Market head over. 2ww white and people don’t say that anymore head over to purpose property.com. Daddy you booking a free strategy session with myself. We’ll have a chat about how we might be able to help you purchase a property in the browser Market previous video over here for more things real estate renovating and Financial Freedom, and I’ll see you in the next video. Peace.
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