Big banks may not be financial saviour in hard times: Survey

Nearly three in four respondents to a new banking survey believe a major bank would not give them the best service should they be in a financial crisis.

The survey for State Custodians Home Loans, conducted by Galaxy Research, asked people who they considered would provide the best service when re-negotiating a home mortgage or investment loan should they hit hard financial times.

Some 72 percent of those polled believe in these circumstances a big bank is not their best option for service.

Joanna Pretty, State Custodians general manager said 37 percent of survey respondents believe they’d receive the best level of specialised attention from a smaller lending institution such as a credit union or building society, 28 percent nominate a big bank, 25 percent say a mortgage broker, 22 percent nominate an accountant, lawyer or financial planner, and 10 percent say a non-bank lender.

“Smaller institutions tend to specialise with different products and services, and are very good at helping people who fall outside traditional parameters,” she said.

“They can also have more of an open mind as to what kind of deal they’d be prepared to do with a customer, as they’re used to evaluating extenuating circumstances.

"If you are faced with a big personal crisis and need to source a new housing loan or re-negotiate an existing one, there are practical steps you can take which will make life much easier.

Firstly, understanding your financial situation is key. You need to totally be across all your essential and non-essential expenses. Secondly, don’t rely solely on well-meaning family or friends to advise you as they’ll always colour their advice with their own personal experiences. Finally, contact various experts – not just one – and explain your situation.

"The more you talk to people, the more likely it will become clear as to who is most able to assist you.”

The survey found 43 percent of youngest adults aged 18 – 24 say they’d turn to a financial planner, accountant, or lawyer first compared to just 15 per cent of those aged 50 plus. Of those aged 25 – 34, a majority 34 percent would seek out a smaller lending institution and for Generation X-ers in the 35 – 49 age bracket, 34 percent would head to a mortgage broker and 35 per cent to a smaller lending institution. Of those aged over 50 years, a majority 46 percent would consult a smaller lending institution first.