Some Lenders Claim They Can Fly

Performance - Service standard, security and lender reputation

Performance relates to the lender rather than the loan itself. It is how reliable the lender is in its’ ability to deliver the right amount of service to you,  how honest they are in their dealings with you and whether they will still be around in a few years time.

Whether you have waited in a queue forever, been transferred from one department to another to another, you have probably been in a situation when service has fallen short at your expense. Whilst it is easy to vote with your feet with mobile phones and similar service providers, mortgages are a different matter. Switching can be costly and time consuming.

If you want a really basic loan that you will pay off over 25 or 30 years, paying maximum interest and without any features whatsoever, performance, although still not irrelevant, is likely to be lower on your list of priorities. Conversely, if you want to take advantage of interest saving features such as additional repayments, redraw or 100% offset accounts, performance must move up your list of priorities. In the case of home loans, poor performance on a regular basis can include delays transferring money or payments going missing altogether, even if only briefly. These delays will reduce interest saving benefits and may cause you dishonour fees. They almost always waste your time and increase your blood pressure whilst you try to work it out.

Unfortunately, performance is an almost completely subjective measure. Once you have identified a short list of lenders, try to find people you trust that have a loan with the lender. Check if they use their home loan and any banking facilities the way you plan to. If they do, find out what they think of the lender and how they rate their performance.

On the bright side, there are some objective measures available to you. The Australian Securities and Investment Commission (ASIC) has acted against lenders and mortgage brokers for misleading claims and advertisements. As an example ASIC took action against both One Direct and MyRate for misleading advertisements on interest rates. Visit the ASIC website at www.asic.gov.au and use the search facility to check up on your lender. Make sure you enter the lenders name properly to get the best results. Try a couple of variations if you are unsure i.e. “one direct”; one direct or onedirect.