Are bigger mortgage lenders better? 

Bigger lenders, with their household names, offer a strong reputation and sense of security for many buyers. With higher margins and greater resources, they also typically offer a wider range of products and services, so you can really hone in on your ideal home loan, confident in the knowledge you’re going with an experienced lender.

Security

Given their reputable name and dominant market share, bigger lenders offer perceived security. With a large number of customers across the country, they’re often seen as a safer option with less risk, in comparison to new or upcoming lenders.

Being well known, bigger lenders also carry a reputation of longevity. This means you may not have to worry as much about your lender shutting down and the repercussions this may have on your home loan, such as being transferred to another lender with potentially higher rates and fees.

Convenience

Another advantage of taking out a mortgage with a reputable lender, such as one of the big four banks, is the convenience of your banking experience. You may find it easier to have all your financial products under the one roof, such as bank accounts, credit cards and personal loans, rather than scattered across different brands.

More choice

Bigger lenders may also offer more home loan products in comparison to smaller lenders, as they have greater administrative resources that allows them to maintain them all. 

Having more options to choose from may give you a better chance at securing a mortgage that meets all your needs.

It’s important to remember that bigger isn’t always better, with the underdogs of the lending market often offering better deals to win customers over. Let’s consider what the little guys can bring to the table.

Competitive rates

Smaller lenders often have very competitive rates and fees, such as upfront and ongoing costs, in comparison to the bigger, better known lenders. This is because they know they’re competing for your home loan business and want to win you over, as well as often having fewer overhead costs that mean they can then pass their savings onto their customers.

More negotiating power

Thanks to their competitive nature, smaller lenders can also be a little more flexible when negotiating a home loan, as they are likely a bit hungrier for your business. Having room to negotiate could mean securing your ideal home loan, rather than settling for one that will do the job but doesn’t fulfill your needs as well.

Innovation

A lot of the time, small lenders are shaking up the financial industry with innovative technology, such as fintech, offering new products and services to their customers. 

Larger lenders, such as the big four banks, may not be as advanced in this space as they tend to have more red tape when it comes to producing new products and tools.

While your instinct when taking out a mortgage may be to go with a brand you’ve heard of, it’s important not to overlook small lenders as they may allow you to snag a bargain in the form of discounted rates and incentives. The best fit for you, however, will ultimately be the one that best meets your needs, budget and objectives.

Don’t limit your choices - shop around for the best home loan for you. With over 2000 home loans to compare on RateCity, you can now compare some of the biggest lenders against some of the smallest to see which ones stack up best.