Mortgages are not only provided by the traditional banks. Today, you have the option of getting a home loan from an online lender like loans.com.au.
There are many benefits if you choose to go with an online lender. A key one is the convenience it offers because online lenders operate via the internet. This lets you do your application through your smartphone, tablet, or laptop just as long you have an internet connection.
This saves you time shopping around for home loans and it gives you the comfort of doing your loan application anytime and anywhere you like. Just like other types of financial product, it pays to know the competitive edge of the lender.
In this article, we will discuss the most important features of a great online lender to look out for:
Online lenders don’t just offer accessibility and convenience. They often offer competitive home loan rates since they don’t have the expenses of a branch. This will get you a cheaper monthly repayment which can save you interest over the term of the loan. Even the smallest rate change can make a huge difference.
Let’s assume you have a $400,000 loan for over 30 years. With the interest rate of 3.66%, the total amount you will pay in interest is $259,554. On the other hand, if you have a higher interest rate of 4.0% you will pay $287,478 in interest. That’s a difference of $27,924. Having a competitive interest rate from an online lender will make a world of a difference.
Upfront and ongoing fees
Any type of loan will come with a variety of fees. Some will have an application fee that you pay upfront, some have a monthly fee and annual fee that are considered to be ongoing fees. Some lenders also have a settlement fee which will be paid on settlement day.
Upfront and ongoing fees in your home loan will vary from lender to lender. So don’t forget to check the fees involved so you can partner your competitive home loan rate with low fees.
Home loan features
Mortgage products sometimes offer features that will help pay off your loan sooner. Look for online lenders that offer features like a redraw offset account where you offset the home loan balance against the amount you have in your offset account. This will bring down the interest you pay, saving you money in the long run.
Other features to look out for are the ability to split the loan between a fixed and variable interest rate, a flexible option to repay the loan weekly, fortnightly or monthly, and an interest-only loan feature for property investors where they pay interest-only for an agreed period of time. An unlimited extra repayment facility can also help pay off your mortgage sooner with lesser interest payable.
Going with an online lender works similarly to using a traditional lender, the only difference is the comfort and convenience in doing all of your loans transactions online, the cheaper home loan rate, features, and fees. Do check out our home loan products to see which one is suitable for you.