02/07/2026
I get many clients asking me what's the difference between going with a Tier 2 or lesser known lender as opposed to the big 4 banks or a well known lender and what the risks are.
It's a great question and one worth understanding before you commit to a loan.
Tier 1 lenders are your big 4 banks — ANZ, CBA, Westpac and NAB. They're household names, heavily regulated, and most people feel comfortable with them. They're also typically faster to move, have strong systems, large teams, and streamlined processes mean approvals can come through quicker.
Tier 2 and Tier 3 lenders are smaller banks, credit unions, and non-bank lenders. There are many great options out there, they're still regulated and still legitimate but they often have more flexible lending policies which can mean greater borrowing power for the right borrower. If you've been told no by a big bank, a Tier 2 or 3 lender might still say yes.
So what are the actual risks?
Honestly — not many. Your loan and your property are yours regardless of who holds the loan. In the unlikely event a lender went under, your mortgage would simply be transferred to another lender. Your rate, your terms, your property — all protected.
The bigger consideration is just making sure the product suits your needs long term, things like offset account availability, rate competitiveness and flexibility if your situation changes.
The right lender isn't always the most familiar one, it's the one that best fits your situation.
DM me and I'll help you figure out which tier makes sense for you.
