Big Bank or Small? Which One Should You Choose?
The easy part of getting a new home is often finding it. That’s not that hard. It is the decision of which home loan bank to lend from that is a little bit harder.
Should you lend from one of the big banks or is a smaller bank a better option?
At the end of the day, your choice of bank could save you (or cost you) hundreds of thousands of pesos over the life of the home loan. Another consideration is the hours of stress you will save yourself if you choose a bank that offers excellent service and no hidden fees for basic transactions. There are a lot of considerations that need to be weighted when choosing where to get your home loan. And you should always get professional advice before choosing any financial product.
Here are a few of the considerations that it can pay to factor into your bank choice.
For a lot of home loan borrowers, their number one top concern is what the interest rate and repayments will be each month. But price and the advertised interest rates should not always be the most important factor for borrowers.
If price is your concern, often the smaller lenders are a little cheaper. As a general rule, smaller lenders offer lower interest rates than the bigger banks, but not always so be sure to double check.
Smaller banks generally do not have a large branch network to pay for, so their own costs are usually lower and this allows them to pass some of those savings to the borrower. So if visiting a branch is something you plan to still do (it is the age of the internet after all), then you should factor in where your closest branch is for your chosen bank.
Speed of Home Loan Approval
Have you found a new home that is in hot demand and you need to hurry to secure it? Then asking about the banks general processing time for typical home loan customers is something you may want to do. The speed of the approval process will depend on a few factors including the need for an appraisal, general internal procedures of the bank approval system, and more.
It goes without saying that finding a home loan at the last minute is never advisable. You are rushing something in the short-term that will be a longterm commitment.
Credit Policy of the Bank
It is not always possible to have a lot of savings in the bank ready for a deposit or a perfect credit history. So in those cases, it may be the smaller banks that will take more time to work with you to find a loan that suits both you and the banks own lending policies.
Similarly, for self-employed people wanting to secure a home loan, their income can fluctuate throughout the year, and in those situations it can actually be the bigger banks that offer more flexible options for a loan. But again, it’s worth checking around.
Ease of access
How easy will it be to work with the bank over the coming years? Yes, years – a home loan is a long term relationship.
How good is the banks online systems? Are they modern and capable of performing some or all of your general bank requirements? Technology can save you hours of trips to a bank branch to perform basic tasks that can be done from the comfort of your (new) home.
But there will be times when a branch visit is required during the home loan.
So where is the closest branch? How helpful are the staff there? Likewise, how easy is it to speak with a banking representative on the phone, such as their call centre for support inquiries?
The (Sometimes) Hidden Stuff
Be sure you are comparing apples-with-apples when looking for a home loan. Some banks charge fees (hidden fees sometimes) for basic things like printing you a copy of your bank statement. Whereas other banks do not charge for this sort of service. So really dig deep to find out the little details that will make your life easy during the home loan term.