Note: State Custodians are no longer accepting new home loan applications. It is only concentrating on its existing customers.
This is simply a review of State Custodians: they are not available on our lending panel.
State Custodians is a Mortgage Manager and Online Lender ( not a bank or credit union) backed by RESIMAC. The benefit of not being a bank is that State Custodians can sometimes offer low-interest rates.
They specialise in tough loan scenarios, but you cannot meet them face to face. So what happens after your loan has settled? They may have won a few awards, but how do their Brisbane home loans compare?
Today we review State Custodians’ Home Loans and put them through their paces.
Note that this review, interest rates, and product information are correct as of 17 November 2022, and all of this information is subject to change without further notification. Any credit applications are subject to meeting the specific lender’s criteria, and the decision is at their final discretion.
Table of Contents
The top 5 things State Custodians are good at
- Very low-interest rates for customers and cheap loan set-up costs: Their Low Rate Home Loan, which includes an offset account, has a very competitive interest rate and no annual fees, which can save you money over the long term.
- Mostly good customer service: While there are mixed reviews from State Custodians’ customers, over half had a positive customer service experience.
- Straightforward Home Loan Products: With only four home loan products, including a Variable Rate, Fixed Rate, Line of Credit and Green Home Loan, State Custodians have fairly straightforward home loan products.
- Specialisation in low doc and bad credit home loans: Being a Mortgage Manager, State Custodians have access to home loan funding from multiple sources, including Pepper, Advantedge and RESIMAC, so they can be more flexible for people with bad credit and low doc loans.
- A fairly responsive online support team: State Custodians in an Online Mortgage Lender, so you can access their customer service team via phone or email during office hours. It has also recently launched Loan Access, an online Loan Management platform. Since State Custodians are fully online, they cannot visit you at your home or meet face to face, which is both positive and negative, depending on your situation.
Top 5 things State Custodians aren’t so good at
- Do-it-yourself online lender means you are dealing with a call centre and no face-to-face contacts. Some reviews reported extended delays waiting on hold to speak with State Custodians’ Customer service team, which is run through a Call Centre.
- Very complicated loan contracts. Sometimes State Custodians’ loan contracts can get up to 90+ pages! Several customer reviews of State Custodians report complicated loan contracts and the fact that their solicitors send the documents by email, and they need to be printed by you, the customer (rather than being posted by the bank), and there is no clear mark where to sign. This can confuse First Home Owners and others with limited experience signing mortgage contracts.
- Very basic internet banking with limited functionality. Being a non-bank, State Custodians cannot offer a fully functioning offset account. Any withdrawals from redraw can only be done to one specific external bank account and may cause difficulty if you require funds fast or on the same day. In other words, you are limited and cannot transfer to any bank account you want. You can only transfer to your bank account, which you nominate when signing up. With over 4 different home loan funders (RESIMAC, Advantedge, Challenger and Pepper), there are multiple internet banking portals which can be confusing at first.
- Can make it difficult for some self-employed applicants asking more information. While State Custodians have specialised in low-doc lending in the past, they have been known to make it difficult for Self Employed applicants by asking for 2 years’ tax returns (compared to some banks that only require 1-year tax returns).
- Their funder Resimac is a non-bank lender known for being conservative. It can request lots and lots of information compared to most regular banks. Resimac and other non-bank lenders cater to a specific market segment, mostly set-and-forget home loan products. If you require a fully functional offset account or have a unique situation where you might be paid bonuses or overtime, State Custodians might not be the right choice for you.
What are the different home loan products they offer?
State Custodians have four main products, which they offer investment and owner-occupied loan options on.
1. Low-Rate Home Loan
The Low-Rate Home Loan is State Custodian’s flagship product. Advertised as having ‘no ongoing fees and a competitive interest rate’, it is available for both investors and those looking to buy their own homes.
This loan is similar to most banks’ basic product, with the advantage of an offset account which can give you access to BPay, a Debit MasterCard and some EFTPOS functionality.
On the Low Rate Home Loan, State Custodians allow up to 10 Years interest-only repayments with a maximum LVR of 80% and only up to 5 years interest-only for owner-occupied loans. They also allow up to 6 loan splits and cannot do land and construction loans.
2. Fixed Rate Home Loan
State Custodians Fixed Rate Home Loan can help protect you against rising interest rates and provides a fixed rate term of between 1 to 5 years, where you can lock in your interest rate repayments.
3. Line of Credit Home Loan
The Line of Credit product is suited for investors who want an interest-only facility. It does not have a 100% offset account, and fixed rates are not available.
While State Custodians’ Line of Credit Home Loan is good for accessing equity from your home, you can only get up to 5 years interest only terms for owner-occupied purposes and 10 years interest only for investment purposes. This is significantly less than some of the major banks that offer evergreen lines of credit products for up to 30 years.
4. Green Loan
State Custodians offers a Green Home Loan to existing customers. This is a very low-rate home loan for customers who want to reduce their environmental impact by making energy-efficient improvements on their properties, e.g. installing solar panels and energy-saving household appliances.
What documents do State Custodians need for a home loan?
The application checklist required by State Custodians is fairly standard compared to most banks. Assuming you are a salaried employee and you are purchasing your first home, they would ask for the following:
- Signed Application Form and Privacy Act form completed by all borrowers
- Identification documents: Current Medicare + Drivers licence or Australian passport
- 3 Months’ Bank statements showing your salary credits with the name of your employer
- 2 Most Recent Computer-Generated Payslips
- Last year’s payment summary (or group certificate)
- Evidence of your Genuine Savings, being statements to show the funds have been held for more than 3 months.
- Most recent statement showing all continuing liabilities – i.e. any open credit card, personal loan, or overdraft statements.
- Signed Contract of Sale
How do you apply with State Custodians?
As mentioned above, State Custodians are no longer accepting new loan applications but are now focusing on existing customers.
If you are a customer of State Custodians and are looking to refinance your loan to another lender, you can log in to their Loan Access portal or speak with a mortgage broker.
What else does State Custodians offer?
State Custodians do not offer much in terms of banking. Being a Mortgage Manager, it is not like Bank of Queensland or Credit unions like Gateway Bank. State Custodians cannot provide fully functional transaction accounts, a rich internet banking portal, savings accounts and insurance.
However, access to their Member Advantage Benefits Program, which gives you access to discounts at brands like Coles, Woolworths, Caltex and BWS, similar to the benefits most Credit Card providers give with the major banks, like discounts on gift cards.
How is a mortgage manager different from regular banking?
Mortgage Managers are very different from banks. In Australia, banks need to be registered deposit-taking institutions with APRA, who are secured by the Australian government’s deposit guarantee.
The Australian Government guarantees deposits of up to $250,000 in Australian Deposit-taking institutions (ADIs) like banks, building societies and credit unions which means you are protected if anything happens to that ADI.
On the other hand, Mortgage Managers are not protected by the ADI guarantee, so if you have funds in your offset account, you do not have the guarantee and could be at risk, as was the case with Banksia Securities Limited, where customers lost up to $400,000.
Also, Online Home Loan Lenders like State Custodians do not generally have a physical shopfront, so you need to work with them over the phone and via email. The upside is the interest rates can be cheaper, but the downside is if something goes wrong, you can only deal with a call centre or work through their internet banking portals which can have limited functionality.
Several State Custodian customers have voiced one specific issue: you cannot make transfers from their Offset Account to any external account you would like – as is the case with many banks’ offset accounts.
With a State Custodians Offset Account, you can only make external transfers to one specific account you nominate at the settlement, which can be frustrating if you need to transfer funds quickly. Still, it does have access to BPay, which can be used for bills.
What are some State Custodian’s Customer Reviews?
Their customer reviews are fairly mixed. Some people are very happy, and others not so much, with some fairly negative comments on popular forums.