Choosing The Home Loan Lender Type For You by:Rod Charles L'Huillier
There are a multitude of different lender types in the housing market and before refinancing or borrowing it pays to know who's who
. Each option has it's pluses and minuses it comes down to choosing the person or institution that suits your needs and who you feel comfortable with. Here's a brief intro:Mortgage Brokers
Mortgage brokers are responsible for introducing borrowers to lenders - they act as an intermediary offering prospective borrowers information on various lending institutions and their products. With the various types of lending institutions available, not to mention the vast array of products on offer, the borrower has various options and choices. The task of the mortgage broker is to determine the most suitable loan for the borrower. While the broking service is often free, a small fee may be charged, and the broker will generally receive commission from the lender they recommend.
Mortgage Managers
Mortgage managers are lending specialists who arrange funding for home and investment loans. Unlike banks,building societies and credit unions, mortgage managers do not have a base of customer deposits with which to fund their loans instead they source their funds via a process known as securitisation. This is a process whereby assets with an income stream are pooled and converted into saleable securities. The mortgage managers job is to set up the loan and perform a liaison role with all parties involved, namely originators, trustees, credit assessors and borrowers. They provide the customer service role and are there to manage your loan throughout its term.
Credit Unions
A credit union is a cooperative that is owned and controlled by the people who use its services. Each member is both a customer and a shareholder in the credit union.Deposits from members are used to fund loans to other members, with the credit union business structure facilitating the process. Credit unions serve people who share a mutual interest, such as where they work, live, or go to church. Credit unions are non profit organisations, and because there are no external shareholders there is no pressure to earn profits at the expense of customers. Like banks, they offer a wide variety of banking facilities such as loans, deposits and financial planning. Credit unions main function is to serve members needs rather than make a profit. They therefore put a great deal of emphasis on customer service and meeting the needs of members.
Building Societies
Building societies operate in the same manner as banks and obtain their funding primarily through customer deposits. As with credit unions, customers are members. In a sense they own the society, which is why they are often referred to as mutual societies.
Banks
In Australia banks are regulated by the Reserve Bank. Banks are the original lending institutions and for the most part they source their funds through customers term deposits and savings deposits via their branch networks. Customers are paid interest on deposited funds and these funds are then available to lend to borrowers. In turn, these borrowers pay interest to the bank on the sum lent. The margin between interest paid on deposits and interest received from loans provides banks with their major source of revenue. A downside of Banks is that Banks generally have a large network of branches supported by many staff members involved in the day to day operation of taking deposits and lending funds. Much of the banks profits are swallowed up in the maintenance of their branch structures, whereas various other types of lenders don't have such hefty overheads.
About the author
Rod Charles L'Huillier is the webmaster of Australia's mortgage resource website - http://www.mortgageseek.com.au - which features real estate resources, lender directory and mortgage analysis through Australian financial planners. Planning For Every Expense by:James Calvin Weaknesses of Wishing by:Alicia Smith Reaching Out to Your Community by:Jennifer McGroary Tips to Lower Your Debt Levels by:Jay Moncliff Paperless Payday Loan - Points To Consider With A No Fax Payday Loan by:Carrie Reeder Bad Credit Credit Card - How To Increase Your Credit Score With Credit Cards by:Carrie Reeder What Is A Secured Loan by:Joseph Kenny Energy Savings in the Asphalt Manufacturing Industry by:Ryan Worral, P.Eng. Credit Card Reward Programs: Getting The Most Out Of Your Credit Cards by:Carrie Reeder What to Look for in a Financial Advisor by:Jay Moncliff Is It Time To Pass On Your Wisdom? Are You Ready To Be A Mentor? by:Adam Coole Managing your Reputation by:Karen Hinds Avoiding Forex-Related Frauds and Scams by:Marquez Comelab