State Custodians is a Mortgage Manager, and Online Lender (and not a bank or credit union) backed by RESIMAC – they may have won a few awards, but how do their home loans compare?
This is a review of State Custodians, they are not available on our lending panel.
The benefit of not being a bank is that State Custodians can sometimes offer low interest rates to entice new customers in, they specialise in tough loan scenarios and you cannot meet them face to face – but what happens after your loan has settled?
Today I review State Custodians Home Loans and put them through their paces.
- What are State Custodian’s Home Loans like?
- What are the different home loan products they offer?
- What are State Custodians’ Interest Rates?
- What documents do State Custodians need for a home loan?
- How do you apply with State Custodians?
- What else does State Custodians Offer?
- How is a mortgage manager different from regular banking?
- What are some State Custodian’s Customer Reviews?
- How do State Custodians compare to other lenders?
Note this review, interest rates and product information is correct as at 3rd December 2018 and all of this information is subject to change without any further notification. Any applications for credit are subject to meeting the specific bank’s criteria and the decision is at their final discretion.
What are State Custodians’ Home Loans like?
The top 5 things State Custodians are good at:
- ✅ Very low interest rates for new 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 were mixed reviews from State Custodians’ customers, over half of them had a positive customer service experience.
- ✅ Straightforward Home Loan Products: With only three home loan products, including a Variable Rate, Fixed Rate and Line of Credit 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 are an Online Mortgage Lender, so you can access their customer service team via phone, or email during office hours. They are not able to 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: Being a cheaper online lender 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 with 90+ pages of loan contracts: 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 did not mark where to sign. This can be confusing for First Home Owners and others who have 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, so any withdrawals from redraw can only be done to one specific external bank account and cause difficulty if you require funds fast or same day. In other words, you are limited and cannot transfer to any bank account you want – you can only transfer to your own bank account which you nominate when signing up, and 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 for 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 asking for 2 years tax returns (compared to some banks that only require 1-year tax returns).
- ⛔️ Their funder Resimac is a non-bank and known for being conservative, and requesting lots and lots of information when compared to most regular banks: Resimac and other non-bank lenders cater for a specific segment in the market, being 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 choice for you.
What are the different home loan products they offer?
State Custodians have three main products, which they offer investment and owner-occupied 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 home.
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 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 the 100% offset account and fixed rates are not available.
While State Custodians’ Line of Credit Home Loan is good to access equity from your home, and you can only get up to 5 years interest only terms for owner-occupied purposes and 10 years interest only for investment purposes – which is significantly less than some of the major banks that offer evergreen line of credit products up to 30 years.
What are State Custodians’ Interest Rates?
State Custodians home loan interest rates are fairly competitive when compared to the big 4 banks, but there are better deals available from some of the smaller banks like Bank of Queensland and Gateway Credit Union especially when considering the limited Offset and loan functionality at State Custodians.
Unfortunately, State Custodians aren’t so cheap when the LVR is above 80%.
Interest rates correct as at 10th December 2018 and subject to change without any further notification.
What documents do State Custodians need for a home loan?
The application checklist required by State Custodians is fairly standard when compared to most banks, assuming you are a salaried employee and you are purchasing your first home they would ask for:
- ☑️ Signed Application Form, Privacy Act form completed by all borrowers
- ☑️ Identification documents: Current Medicare + Drivers license, 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?
You can use State Custodian’s home loan application form to put together your mortgage application.
Please keep in mind that this was the latest form as at December 2018, chat to State Custodians for their most recent document requirements.
What else does State Custodians Offer?
In terms of banking, not much else. Being a Mortgage Manager they are not like Bank of Queensland or Credit unions like Gateway Bank so State Custodians cannot provide fully functional transaction accounts, a rich internet banking portal, savings accounts and insurance.
They do offer access to their Member Advantage Benefits Program which gives you access to discounts at brands like Coles, Woolworths, Caltex and BWS which is 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 and means you are protected if anything happens to that ADI.
Mortgage Managers, on the other hand, 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 like 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 need to deal with a call centre and work through their internet banking portals which can have limited functionality.
One specific issue several State Custodian customers have voiced is the fact that 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 State Custodian’s 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, but 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, with some people very happy and others not so much with some fairly negative comments on popular forums.
How do State Custodians compare to other lenders?
Wondering if State Custodians are right for you? Our team of Mortgage Experts can help.