disadvantage of getting a loan from small lender

hi all,

just want to ask what are the disadvantages of getting a loan from a small lender instead of the big banks? I'm really considering those small lenders because of the difference in interest rate and annual fees...

thanks in advance...

You need to look right into the fees and charges. Do they have establishment fees / valuation fees / account keeping fees / exit fees / early prepayment fees?

How small are we talking? Private lender or just credit union / building socy? The other things to consider is do they also offer insurances / bank accounts / credit cards / redraw / fixed loans etc. Can you access a branch readily? Do they have internet / telephone banking and is there any fees associated?

im looking at mortgage house, CUA and other credit union... I have talked to someone yesterday from mortgage house and the rate is 7.14%, with offset account, no annual fees... though there is around 200 plus for the processing and ofcourse no credit card but it has internet banking, etc

compared to other banks with 7.8% and with annual fees...

We will be going with Mortgage House once we save enough for the deposit. I think they are better than the banks and worthwhile going through them. some of the offset accounts that banks offer aren't 100% offset like Mortgage House. For us it will work out better going through Mortgage House..... hope all works out for you as well!

Small banks tend not to offer:
1. Any other financial products- ie credit card, savings account, insurance.
2. No branch access
3. Higher exit cost and application fee on average

Having said that they are a worthwhile consideration due to their lower cost.

Your statement about he rate being 7.8% with annual fee for big banks is WRONG- 90% of borrowers who goes with the BIG bank DO NOT pay the "Standard rate"- it's normally around 7.2-7.4% with annual fee.

Also 7.14% with MH is DEF not the lowest...if your going to go with a small player - you might as well go for the cheapest rate.

Homeside ( backed BY NAB)- 6.9-7% Max. No annual fee and 100% offset.
BMC- 6.88% with annual fee, 100 % offset, full feature and credit card
Suncorp bank- 7.1%

P.s Nothing wrong with MH, i heard some good stories about them- especially in term of customer service

Regards
Michael

We were very happy with our credit union - they do have savings accounts, credit/debit cards, re-draw facilities, line of credit accounts, off set accounts, insurance etc - we did not use all of the above but they do offer them.
Also no annual fee or account keeping fees and by far lower cost application fee than any banks we looked into.
They do have branches and also can use Reditellers at no cost - Reditellers are ATM's to which a combination of financial institutions belong so are readily available everywhere.

Helyn - sounds like a good bunch, who are they?

Regards
Michael

AllianceOne credit union - only in SA, I think.

Forgot to add - also no exit fees at all.

Awesome! always a bonus not having exit fee