The Pros and Cons of Small vs Large Lenders

How to choose which is best for you and your next home loan.

Choosing between a small or large lender for your home loan can offer advantages and disadvantages depending on your financial circumstances and priorities. Our residential brokers work with more than 30 lenders, both small and large, and have got to know the pros and cons associated with each. They’ve put together a few things you might like to consider when deciding whether a large bank or smaller lender is better for you.

Small Lenders: Pros

Personalised Service: Small lenders often offer a more personalised and customer-centric approach, catering to individual needs and preferences.

Flexibility: Small lenders are often more flexible in terms of loan terms, repayment options, and eligibility criteria.

Faster Decision-Making: Smaller institutions can make lending decisions more quickly, which can speed up the process and be beneficial when time is of the essence in getting your home loan approved.

Local Focus: Small lenders tend to have a strong focus on local communities, contributing to the local economy and fostering trust.

Small Lenders: Cons

Limited Branch Network: Small lenders typically have fewer branches which may limit accessibility for customers who like to be able to access a physical branch for their banking and finance needs.

Limited Product Range: Small lenders may offer a more limited range of financial products and services compared to the bigger lenders.

Big Banks: Pros

Financial Stability: Big banks are generally considered more stable and less prone to financial crises.

Comprehensive Services: Larger lenders often offer a wide range of financial products and services, including investments, insurance, and international banking to allow clients to use the one institution for all their finance needs.

Extensive ATM and Branch Network: Big banks often have a vast network of ATMs and branches, providing greater accessibility to customers.

Lower Interest Rates: Due to their scale, big banks can sometimes offer lower interest rates on loans.

Big Banks: Cons

Less Personalised Service:  Large lenders and big banks may provide less personalised customer service and in some cases customers may feel they are treated more as a number than an individual.

Stringent Requirements: Large lenders often have stringent eligibility criteria and longer approval processes.

Slower Response Times: The bureaucracy in large organisations can sometimes lead to slower response times and decision-making.

There’s a number of things to consider when deciding on whether you should choose a small or large lender for your home loan. Our brokers can present you with both options and help you weigh up the pros or cons to decide which is better for you.

Disclaimer: General information is provided and has been prepared without considering your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal; tax or financial advice and you should always seek professional advice in relation to your individual circumstances.


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