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Getting your loan approved is just as important as choosing the right loan.

Most people don't realise how difficult it can be to meet the Lender's strict criteria. Getting help from your True Choice Home Loans Mortgage Analyst / Broker is one way to avoid disappointment.

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Home Loan Lender Types

What are Banks?

Money provides a convenient way of storing and measuring value. It also facilitates saving and lending. In our community there are many agencies that provide services relating to saving and lending. Together they form the financial services sector of the economy. Banks are the largest provider of these services. The remainder are provided by what are called non-bank financial intermediaries (NBFIs) These include:

  • building societies
  • credit unions and cooperatives
  • finance companies
  • merchant banks
  • friendly societies.

However, banks differ from NBFIs in that they have a special status. To be called a bank, an institution must have permission from the Reserve Bank of Australia (Australia's central bank). This is known as a banking licence. Banks can also be set up under State law.

The Reserve Bank directly supervises such authorised banks, while State governments are responsible for State banks (which voluntarily comply with Reserve Bank requirements). These requirements set minimum standards in relation to the activities of banks. Such standards are designed to protect depositors and generate public confidence in the banking system.

The Reserve Bank puts into effect the Federal Government's decisions regarding regulation of the money supply. Additionally, it supervises the banking system, deals in the money and securities markets, watches over and deals in the foreign exchange market, invests Australia's foreign exchange reserves, provides banking services to governments and other selected bodies, and prints and issues currency notes. As agent for the Commonwealth government, the Reserve Bank also distributes coin and manages the Commonwealth's domestic borrowing programs.

What are Mortgage Managers?

Mortgage Managers are mortgage specialist organisations who organise funding for home buyers and property investors (residential, commercial, industrial, retail) from a variety of funding sources, and badge it under their own name. Examples of Mortgage managers include Wizard Home Loans, Aussie Home Loans and RAMS.

The Mortgage Manager is responsible for arranging the funds for a loan and the ongoing, prudent management through each phase of the loans life - from credit assessment to the monitoring of loan repayments, insurance renewals, interest rate adjustments and loan variations.

The Mortgage Management industry in Australia continues to growth. It is worth pointing out that there are more than 22,000 non-banking organisations in the US providing more than 50 per cent of home mortgages.

What are Sub-Prime Lenders?

Sub-Prime lenders are Mortgage Managers who specialize in lending to customers who do not fit the mould of ordinary lending. Typically, sub-prime lenders would lend to credit impaired, self-employed (without full financials), individuals in their current occupation for less than 6 months, and customers with out-of-the-ordinary income sources (such as pensions etc).

Sub-Prime lending is a growing market in Australia, as more and more individuals fall outside of standard bank lending guidelines.