The big four vs independents: Mozo weighs up the pros and cons

Property ObserverMay 4, 20150 min read

In the past, it was typical for borrowers to go straight to one of the big four and ask for a loan – usually from the bank that held their savings.

But with competition high, you have the opportunity to get the upper hand and choose wisely.

Mozo’s database shows that there are more than 60 home loans that have lower interest rates than the big banks. Topping the list include the likes of, UBank, ING Direct, Bankwest, Heritage Bank and Newcastle Permanent.

Doing your homework and considering smaller banks, mutuals and non-bank lenders beyond the headlining names is where the biggest savings are to be found.

The smaller tier has recently started upping the pressure on the top-end banks, particularly around the topic of rates, says Mozo director Kirsty Lamont.

“Even if you have a big loan amount and are eligible for a package discount with the big four, it’s still likely you’ll be able to get a cheaper rate by looking outside these banks and going with a smaller bank or mutual,” she says.

Credit unions, building societies and smaller banks also tend to have higher customer satisfaction ratings for customer service and trust, according to the thousands of home loan reviews published on each year. They have also been closing the gap on features.

However, there is a downside with choosing an independent bank for your loan. You might find your banking somewhat separated, Lamont explains.

“You have to ask yourself whether you’re happy to have different banking providers or whether you want to move your existing banking to that lender so that you’ve got your everyday accounts, your savings, your home loan and your credit cards all with the one bank,” she says.

Those who have been loyal to a big bank for some time might be less keen to face this upheaval or to start holding accounts across multiple banks, however it is becoming more commonplace.

Mozo’s home loan expert Steve Jovcevski also warns that, while it’s not likely you’ll need it, it’s a worthwhile consideration that technically it’s only the big four who are 100% guaranteed by the government.

For information on property loans, rates and more, visit or click here for the free Property Observer eBook, Get loan-savvy – tips for a first time, investment or refinancing loan, which helps you decide on a home loan that meets your requirements.

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