Last updated: September 2026

Major banks or non-bank lenders? It is one of the first calls you make on a home loan, and most people get stuck on it. We hear the same five worries about smaller and non-bank lenders in nearly every first meeting at Soren Financial, so this post goes through each one.

What is a non-bank lender?

A non-bank lender is a lender that writes home loans but does not hold a banking licence, so it cannot offer you a savings or transaction account. It raises its money from wholesale markets and investors instead of from customer deposits, and it holds an Australian Credit Licence with ASIC. The rules it has to follow when lending to you are the same rules the banks follow.

People also use “smaller lender” and “second-tier lender” to mean much the same thing, though a second-tier lender is usually a smaller bank that does hold a banking licence, such as ING, Macquarie, Bendigo or Bank of Queensland. Both sit outside the big four.

They are a real part of the market, not a fringe. The Reserve Bank puts non-bank lenders at around 5% of the Australian financial system (RBA Bulletin, March 2023).

Myth 1: Major banks are safer. A non-bank lender could go bust and take my house with it.

Every lender that writes home loans in Australia is regulated. Major banks, credit unions and building societies sit under APRA. Non-bank lenders hold an Australian Credit Licence with ASIC and have to follow the same responsible-lending rules as the banks.

And if a lender did fail, your loan does not disappear. The book of loans gets sold to another lender and you keep paying under the same contract, usually with a letter telling you the new name to expect on your statement.

Myth 2: Non-bank lenders charge more than major banks.

Usually the opposite. A non-bank lender does not have thousands of branches to pay for, so it competes on price. When we run a rate comparison for a client, the cheapest variable rate is more often from a non-major than from ANZ, CBA, NAB or Westpac. The major banks are paying for the brand you recognise, and that cost ends up in the rate. If you have only ever looked at big-four rates, it is worth widening the search.

Myth 3: It is easier to get approved with a major bank.

Approval comes down to the lender’s policy and how strong your application is. The size of the lender has little to do with it. Major banks tend to be strict on anything that does not fit the standard PAYG mould. Non-bank lenders are often the ones that will look properly at a self-employed applicant, a recent job change, or income from a trust or company. We regularly place those files with a non-bank after a major bank has declined them.

Myth 4: Major banks offer a better all-round package.

A major bank can give you a credit card, a business account and a home loan in one place. That is handy if you want everything under one login, but it has no bearing on whether the home loan itself is any good. Plenty of non-bank lenders only write home loans, which tends to mean simpler products and quicker turnaround. Their apps and online banking have caught up with the majors too.

Myth 5: Non-bank lenders are not secure.

APRA-regulated lenders have to hold set levels of capital and cash. Deposits with any of them are covered by the Australian Government’s Financial Claims Scheme up to $250,000 per person, per institution. The guarantee applies the same way whether the bank is large or small.

A non-bank lender cannot take deposits at all, so that guarantee does not apply to it. That matters if you are choosing where to park savings. It does not matter when you are borrowing, because you are not giving them your money, they are giving you theirs.

Who are the non-bank lenders in Australia?

This is the question the myths usually hide. Here are the names you will come across.

Non-bank lenders (no banking licence)

Second-tier banks (licensed, just not the big four)

Macquarie in particular has taken a large slice of the market off the majors on rate and turnaround, and it holds a full banking licence.

Major bank or non-bank lender: the short comparison

	Major bank	Non-bank lender
Who regulates them	APRA and ASIC	ASIC, under an Australian Credit Licence
Interest rates	Often higher, brand and branch costs built in	Often sharper, lower overheads
Policy flexibility	Strict outside standard PAYG	More room for self-employed and unusual income
Turnaround	Can be slow at busy times	Usually faster, smaller credit teams
Deposit guarantee	Yes, up to $250,000 per person	Not applicable, they cannot hold deposits
Everyday banking	Yes, accounts and cards in one place	No, home loans only

So when does a non-bank lender make sense?

And when do major banks make sense?

What we see in practice

Most of the clients who come to us start out assuming the major banks are the safe default. About half of them end up settling with a non-bank or second-tier lender once they see the rate and the policy side by side. The other half stay with a major bank, and that is the right answer for them. There is no winner in the major banks versus non-bank lenders debate. There is only the lender that suits your file.

How to choose

Compare the total cost, not just the headline rate. Fees, offset accounts, redraw and break costs matter. Work out how much you can actually borrow first, then check who will approve you, because the best rate in the country is useless if that lender’s policy knocks your application back. That is the part a Sydney mortgage broker does for you: we know which lender’s credit team will say yes to your file before we send it.

Non-bank lender questions we get asked

What are examples of non-bank lenders in Australia?

The best known are Pepper Money, Liberty Financial, Resimac, Firstmac, La Trobe Financial, Bluestone, Athena, Mortgage House, Brighten, MA Money and Orde Financial. Separate to those are the second-tier banks such as ING, Macquarie, Bankwest, Bendigo, Bank of Queensland and Suncorp, which do hold banking licences.

What does “non-bank lender” actually mean?

It means the lender does not hold an Australian banking licence, so it cannot take deposits or give you a savings account. It funds its loans through wholesale markets and investors instead. It still holds an Australian Credit Licence and answers to ASIC.

Can I get a home loan from a non-bank lender?

Yes. Non-bank lenders write ordinary home loans for owner-occupiers and investors, including construction and refinancing. Most of them do not lend to you directly, they lend through brokers, which is why you may not have heard the names.

Are non-bank lenders safe?

They are regulated for how they lend to you, and the loan contract protects you the same way a bank contract does. The difference is the government deposit guarantee, which covers money you deposit with a licensed bank. Since you are borrowing rather than depositing, that guarantee is not part of the picture.

Do non-bank lenders charge higher interest rates?

Not as a rule. Their prime rates are frequently below the major banks. Their specialist products, the ones for borrowers with credit issues or unusual income, do carry higher rates, which is where the reputation comes from.

If you want us to run your scenario across both major banks and non-bank lenders, email startnow@sorenfinancial.com or check your serviceability here.