What is Finder Score?
The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.
Read the full Finder Score breakdown
How to compare a non-bank lender
These basic home loan comparison tips are true for non-bank lenders and any other financial institution.
- Interest rates. A lower interest rate will always save you money – but remember, it's not the most important thing to consider.
- Loan type. What type of loan do you need? You can get a fixed rate home loan or a variable rate one. You can also consider an interest-only repayment option, but most borrowers go for principal-and-interest repayments.
- Loan fees. Fees on home loans matter less than the interest rate, but it's always good to avoid more fees if you can.
- Loan features. The ability to make extra repayments can help you get out of debt faster and pay less interest. However, not all loans allow this. An offset account is another useful feature that lets you save money in a bank account while also reducing your interest costs.
What is a non-bank lender?
A non-bank lender is an institution other than a bank that offers loan products to consumers.
These lending institutions do not hold a banking licence and therefore cannot hold your money in a bank account.
This doesn't mean they are less trustworthy. They are tightly regulated, as defined by the Consumer Credit Code, which governs all credit transactions in Australia, and by the Australian Securities and Investments Commission (ASIC).
Banks and credit unions are regulated by the Banking Act and are listed by the Australian Prudential Regulation Authority (APRA) as authorised deposit-taking institutions (ADIs). You can see the full list of these institutions on APRA's website.
How does a non-bank lender work?
Non-bank lenders are privately owned, typically relying on wholesale sources to get their funding. While non-bank lenders may not offer all the financial products that a bank does, many have a wide selection of products.
Non-bank lenders come in several forms, including the following:
- Online lenders. These companies are credit providers operating online, usually with cheap deals.
- Fintech lenders. Similar to an online lender, but these types of home loan providers tend to emphasise their speed and ease of approval as well as their low rates.
- Specialist lenders. Another type of non-bank is lenders with a specialised focus, such as lenders to older Australians or borrowers with bad credit.
What about credit unions?
Definitions here can be tricky. There are credit unions, building societies and similar customer-owned banks. Some of these institutions call themselves banks and are certainly APRA-regulated like the big banks. But these institutions are customer-owned, meaning they don't pay dividends to shareholders and reinvest profits to members and their local communities.
You can visit the Customer Owned Banking Association website to find a list of all its member institutions, some of which do call themselves banks.
Sometimes a non-bank is really just a bank
These definitions can get technical and rarely matter to the ordinary borrower. Many digital lenders look like small non-banks but are owned by one of the Big Four banks or another Australian retail bank. Some of Australia's newer neobanks are independently owned companies that don't call themselves banks but have banking licences or are in the process of gaining full banking licences.
Can I get a lower rate with a non-bank lender?
Borrowers have experienced rising interest rates over 2022 and 2023, so looking for a lower rate has become more important. Non-bank lenders are actually providing some of the most competitive rates as interest rates rise. They are more likely to have personalised interest rates that change relative to your risk as a borrower.
Online lenders in particular often have cheap deals. They have lower operating costs that allow them to compete with the banks by undercutting the cost of their products. In doing so, the banks have to respond to the competitive market and lower theirs as well.
If you really want to get a sense of which rates are the lowest on the market now, check out our cheapest home loans page. Non-bank lenders typically dominate the list of lowest rates each month.
What are the advantages of a non-bank lender?
- Competitive interest rates. Non-banks don't have the same overhead costs as banks and are able to pass on their savings in the form of lower interest rates.
- Faster turnaround. Non-banks often have more digital processes. This means they can work through applications in a much faster time frame.
- Complex lending situations. Also thanks to their less rigid digital processes, non-banks are able to assess a wider variety of borrowers, such as those who are self-employed, have had bad credit or have multiple jobs.
- Personalised service. Because non-banks don't have the same big teams and processes, they can provide much more personalised customer service. They might not have physical branches but they will have other easy ways to get in touch.
Are there any disadvantages to using a non-bank lender?
The potential downsides of a non-bank lender are small and might not apply to every lender.
- Fewer services. Many non-bank lenders offer only a handful of financial products, making it harder to do all your banking in one place.
- No physical branches. If you prefer to do your banking in person, then a more traditional bank would probably be better for you.
- Fewer options. The larger banks offer a broad suite of mortgages that suit most borrowers. Non-bank lenders may have fewer options, and this can be harder if you're a self-employed borrower or if you have bad credit history.
- No deposit guarantee. If a bank is regulated by APRA as an authorised deposit-taking institution, then a customer's savings are protected up to the value of $250,000 if the bank collapses. Non-bank lenders may not fall under this scheme, although some do because they are operating under the banking licence of a bigger bank. As a borrower, this doesn't affect you unless you have money in an offset account, which is essentially a form of savings.
What happens if a non-bank lender goes bust?
As a borrower, your lender going bankrupt wouldn't affect you too much. They've already lent you the money after all. If your lender went bankrupt, you wouldn't magically escape your mortgage debt. You would need to keep repaying your loan. If your old lender gets bought up by a new lender, then they will take charge of your mortgage, but your existing loan contract remains in effect.
Learn more: What happens if an online lender goes bust?
Finding a good loan from a non-bank lender
The basic home loan comparison tips are true for non-bank lenders and any other financial institution.
- Get a low interest rate. A lower interest rate will always save you money.
- Work out what loan type you need. You can get a fixed rate home loan or a variable rate one. You can also consider an interest-only repayment option, but most borrowers go for principal-and-interest repayments.
- Don't forget to factor in loan fees. Fees on home loans matter less than the interest rate, but it's always good to avoid more fees if you can.
- Find a loan with the features you need. The ability to make extra repayments can help you get out of debt faster and pay less interest. However, not all loans allow this. An offset account is another useful feature that lets you save money in a bank account while also reducing your interest costs.
List of non-bank lenders in Australia
Here is a list of many prominent small and non-bank lenders operating in Australia.
Frequently asked questions about non-bank lenders
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Ask a question
My question is, when mortgaging with a non-bank lender, is the money I have in the offset account covered by the government guarantee?
As savings accounts (with balances up to $250k) are with one of the “Big4”.
Hi Brett,
Thank you for your inquiry.
Which bank do you have your savings account with? Usually, savings accounts from banks (other than the “Big 4”) and other financial institutions are covered by the government guarantee up to $250,000. You can check/confirm that through ASIC if you like.
Cheers,
May
Hi Just wonder do you still lend to foreign investors?
If you do, what kind of deposit I need to have please. thanks
Hi there Lin,
thanks for the question.
Each lender will have their own policy regarding foreign investors, with some not lending to foreign investors and others lending but sometimes with added requirements or restrictions. It’s best to compare loans and then contact any lenders you’re interested in borrowing from to see what their policy is.
I hope this helps,
Marc.
I HAVE TAKEN ON AS MY HOME A OLD CARAVAN PARK FROM MY DECEASED PARTNER. THE ESTATE SOLD OFF MUCH OF THE BELONGINGS TO SATISFY DEBT OWED. I TOOK ON THE REMAINING. THE PARK ITSELF IS OPERATING AND HAS GOOD EQUITY, HOEVER THE BOOKS DO NOT LOOK AS GOOD. looking TO REFINACE OR CONSOLIDATE MY HOME WHICH IS ALSO MY HOME BUSINESS THEREFORE BRINGS IN AN INCOME/RENTAL. THERE HAS BEEN PREVIOUS OFFERS OF $850,000.00 TURNED DOWN AND THE DEBT IS ARROUND $350,000.00.
It IS THE ONLY FREEHOLD LAND ON THE SNOWY HYDRO KHANCOBAN PONDAGE AND BEING HOMEBASED I AM OPEN SEVEN DAYS A WEEK WITH 24HR AVAILABILITY.
Hi Fiona,
Thanks for your question.
If you’d like to refinance with one of the lenders on this page, please click ‘Go to site’ to submit an enquiry.
If you’re not sure which lender to approach, I’d recommend that you get in touch with a mortgage broker. A mortgage broker is a home loan expert who can help you find the right loan for your situation.
Cheers,
Shirley
Will any of the lenders, consider a person over 50 for a homeloan. I have a deposit but will need to borrow approx $250,000 on a salary of $60,000.
I am a university graduate with no debts who wants to work in NSW but only if I can buy a home.
Hello Bebe,
thanks for the question.
All of the lenders we spoke to regarding this same question last week said there’s no maximum age when borrowing for a home loan. If the lender feels that you satisfy their lending criteria they’ll approve the loan. You may wish to contact some lenders before making any applications and enquire as to their policies before making any formal applications.
I hope this helps,
Marc.