There are several online lending institutions and platforms currently operating in the mortgage space enticing potential customers with low rate home loans. They can be successful in seducing clients with the promise of cheap loans but how do they compare to conventional lenders and utilizing the services of a broker?

The Human Cost

By taking the face-to-face human element of applying for a loan online there are several negative impacts on the client experience.

• By not having the terms of the loan explained in full in a manner you understand means you may be entering into something you do not totally comprehend. This can be of concern for a first home buyer or anyone not familiar with the finance process. A mortgage broker will, however, be on hand to answer any queries and explain all the quirks and features of a new facility in language you understand.
• Applying for a loan online means you are a cog in a wheel, a number in a queue. Your application will move through as part of the lender’s process and you just have to sit back and wait. Not having the ability to speak to someone or having the provision to escalate a file in progress means potentially missing crucial finance approval and settlement dates. Having a mortgage broker in your corner means you have someone to advocate on your behalf at all times ensuring you not only get a great deal but your application is settled smoothly.
• Online lenders do not offer the same ongoing service you enjoy from having a relationship with a mortgage broker. An online platform is unlikely to have a dedicated person on call to answer questions and assist with ongoing account maintenance. A mortgage broker will personally follow up with you for the life of the loan and actively seek to ensure your rate and product are still competitive and relevant to your needs. An online lender will unlikely let you know in a few years down the track if there is a better option elsewhere.

What Flavour are You?

If you are applying for a loan online, you had best ensure your application is “vanilla” in every way, meaning your circumstance is straight forward and your position is not complex. There are several areas which may provide obstacles to securing an approval when applying online.

• If you have a unique property, it may not be deemed as an acceptable security. Whether it be the property itself or if it’s not in an acceptable postcode you may be ineligible.
• If your employment status is not straightforward there may be problems. If your income doesn’t fit into a standard box due to you being on contract, having bonus or overtime income and even multiple employers then you may get thrown into the “too hard” basket. A mortgage broker will be able to tailor a solution to ensure your finance needs are met with a lender willing to work with your unique situation.
• If your credit history is not exemplary an online lender may not have the policies in place to approve a finance application. A mortgage broker has a panel of lenders, many of whom are well placed to accept your application if you have a black mark on your credit history – depending what it is.

When taking out a mortgage application its important to consider what kind of service experience you expect. If you are happy to do all the heavy lifting yourself  with no after settlement service  –  provided you have a straightforward position and do not need your finance in place in any great hurry –  then online lending platforms may be a viable option. If having a dedicated industry professional on your side for the entire life of the loan acting as your unbiased advocate at every step of the way and ensuring your product is competitive and your changing needs are met – you know what to do.