I guess there doesn't seem like a good reason not too, and on top of all the other reasons, they can have the loan set up within a week as opposed to 3-4 with the big bank. This is very good as settlement is once finace is sorted.

Thanks for your comments guys, I guess if a loan broker is suggesting going with a non bank that it must be a good idea

Hi Richard and Terry, I'll squeeze a response to both of you in one to make it easier. I've cut parts of your responses into and put my responses against these.

If there is LMI involved then the LMI company will dictate the requirements you will have to meet. So if in the future you apply for a increase and your postcode is no longer allowed with then you won't be able to increase the loan. Or your employment may change casual and they won't allow it etc etc.

>> ok I see your point. but wouldn't this be a problem with a bank as well?

Also there is only 2 major LMI companies, so giving your detail to one will mean if you go to finance at another lender, or a bank and borrow more than 80%, than that lender's LMI people may know your info already. This is not good if you have already been rejected (or if you have told them different info!).

>> I don't see this as a problem for me.

Also – ask them their fixed rates. They will probably be much higher than a bank. So if you suddenly decide rates are going up and you want to fix……..

>> they currently offer, 3 year fixed for 6.99%. this seems competitive.

What happens if they were to sell their loans to another lender? Sudden increases?
Customer service after a few years?

>> Aren't I locked into the variable rate, so my rate will only increase if they increase the variable rate on everyone, including the new clients. this would mean that they loose their market edge of a low variable rate and not win more customers. what I'm saying is, isn't it in their best interest to keep it as low as possible?

Lack of offset is a real problem too. Without one you will be paying down loans which may not be good for tax later on.

>> I thought that having money in an offset against an interest only investment loan then means that it will start to pay the principle off and therefore not be tax effective. Because I can have unlimited deposits and redraws (with no minimum) I plan on putting any excess 'offset' money into my personal home loan and leave the investment loans as is (just pay them fortnightly/monthly) from the home loan account.

Problem is you cant go the 4 or 5th mortgage insurer once you have max out with another because there are only 2 of them out there. Unlike lenders where you can switch around and try another lender.

>>

As Terry mentioned it is horses for courses but i wouldnt touch a lender like them. 
Guess i can think of all the securitised players who are no longer with us. Promised the world yet didnt last the distance.

Reminds me of a few horses i have had a quid or two on.

If they were that good why dont they have a bigger market share.

>> I guess its like Steve says "success comes from doing things different from others". I've been asking lots of other people over the last few weeks about who they use and why. Like you said many are with a big bank, but the only feasible asnwer is that their loan broker directed that way or for the security of a big bank.

>> my belief is that if they haven't fallen yet then they are most likely a stayer. We;ve seen that anyone is fallible, even some of the biggest banks in the world that were 'too big to fail" have fallen. Also, excuse me here, brokers have a vested interest in going with the places that will give them the best cut. After all this is their livelihood, this is how you feed your kids (and buy the 4WD's . I may be proved wrong in the coming years but right now the risk is 1 months repayments, and if they are what they advertise they are then I'll be happy.

Hi Terry, thanks for your post. I spoke with the lender a couple of times and he got me to put my worries down in email, this is what he wrote back.

Interest Rate: 5.06% standard variable
Free Application
Free Valuation
Free Settlement Fee
No Monthly or Annual Fees
No Ongoing Fees
Free Internet Redraw
Free Salary Crediting
Free Online Banking
Unlimited extra repayments allowed
Repayments: Monthly, Fortnightly or Weekly
Exit Fee: 1 months payment in the first 5 years only
The loan is portable if you sell
No mortgage insurance for loans under 80%.
You can increase the loan at anytime

in response to your questions;
1. There is no guaranteie they will remain low. (neither are the banks) –

this is the risk but like you said the risk is the same with big banks. They told me that they source their money through NAB so will be inline with their movements.

2. usually high exit fees.

– its one months repayment. this is higher than big banks
and the main one
3. LMI is applied to the whole loan which could limit you in the future
and

What do you mean by this?? does LMI = lenders Mortgage Insurance ?

4. difficulties dealing with them in the future

5. difficulties in trying to get an increase etc

I also spoke with my broker (who is in top 100 in country) and he said that he can't match it and if I was happy with risk of going with a non-bank lender then do it.

Any more input anyone?

Cheers again,

invest2surf.