There are a number of ways you can apply for a home loan these days. You can walk into a bank branch like everyone used to, but now, two of the more common ways to apply for a home loan are through an online mortgage broker or directly through an online lender.
We’ll compare applying for a home loan through an online broker vs an online lender to help you figure out which option is the best one for you.
One popular way of applying for a home loan is to do so with an online mortgage broker. Mortgage brokers act as a go-between for you and your home loan - someone will arrange a home loan deal for you from a range of different options and guide you through the process, helping you to:
Understand what each loan costs and how they work (covering fees, interest rates features etc.)
Work out what you can afford to borrow as well as your needs and goals
Gather the necessary paperwork
Help you through the home loan application step-by-step
Often, mortgage brokers get paid a fee or commission by the lender for recommending their loan product, meaning you often don’t have to pay them anything, although some brokers will charge a fee. Of course, this can sometimes cause difficulties, which we’ll discuss later.
You don’t have to use a mortgage broker for your loan. You can also go directly through an online lender, which could end up being more cost effective and get you better results.
We’ll let you in on a secret - online doesn’t mean impersonal.
In years past, the internet and home loans have combined to create a number of ultra-fast, low-rate online lenders that allow you to apply for a home loan directly through their websites without having to walk into a bank. These lenders are often 100% online, and the lack of physical branches means they tend to offer home loans with lower interest rates and fewer fees compared to the bigger banks, which have more overheads to pay for.
The benefits of applying for an online home loan through a lender such as loans.com.au can be the following:
Convenience Instead of walking into a bank, you can just apply for a home loan on your couch while watching TV (although this might not be the best way to do it)
Competition There are a lot of online lenders operating today, meaning there are more of them competing to offer lower and lower interest rates and fewer fees.
Quick applications Many online lenders can quickly process online home loan applications, whereas traditional banks can take much longer. A lot of them are able to verify your identity online and assess your repayment abilities digitally, which speeds things up.
Good home loan features Many online lenders offer home loans that not only have low rates, but also a strong suite of features such as offset redraw facilities. Many of them will also offer online home loan portals that allow you to manage your home loan easily via your mobile, or have at-call customer service specialists to assist you.
There’s a common argument going around that online home loan lenders tend to offer home loans to customers who maybe have poorer credit histories or lower incomes but this is actually more of a myth: Most online lenders still conduct the proper responsible lending checks and in some cases will only lend to customers such as those who can afford a deposit of 20% or more.
It can sometimes be cheaper to go directly to a lender compared to a mortgage broker. With a mortgage broker, you’re paying someone (or the lender is paying them) to complete most of the home loan application process for you, whereas you might have to do some of it yourself with an online lender.
Mortgage brokers also run a risk of recommending you a home loan that doesn’t have the lowest rate you could be getting. The Financial Services Royal Commission during 2018 identified many mortgage brokers were recommending unsuitable products to customers because of the commission they were being paid by the lenders. This is less of a problem now due to the recommendations made by the Commission, but there’s still the possibility that a broker might not recommend the very best loan for you.
Ultimately, whether you save money or not will come down to whether the home loan you end up with is the right one. This can happen whether you go with an online lender directly or with a mortgage broker, but going directly through a lender means you won’t get a loan that isn’t suitable for you, and might avoid having to pay a fee to certain brokers.
While a mortgage broker could guide you through the home loan process, you can do it yourself quite easily if you decide to go direct with loans.com.au. By applying for a home loan with us you can use OnTrack, our award-winning online application portal that gives you complete clarity on your loan application, keeping you up to date with the progress of your loan anytime and sending alerts straight to your phone. You can use onTrack to book an appointment with your Lending Specialist, upload, review, and approve documents, receive notifications of milestones 24/7.
Once you’ve fast-tracked settlement of your loan with onTrack, you can then use our Smart Money app to continuously manage and review your home loan.
To get started with your home loan application, apply now or book an appointment with one of our friendly lending specialists.