Separating the good online lenders from the bad!
Last year, we officially launched our online brand, and over the last 12 months we have seen the mortgage market in Australia change substantially. As Australia’s leading online lender, we have noticed a trend starting to emerge where a few smaller companies are following our lead and becoming ‘online lenders’. It’s becoming an increasingly popular market, and is very cut throat with pricing, but with these smaller guys entering the market, buyers need to beware of who they are dealing with.
Because our customers are shopping online for their finance, we understand that they are going to do some very thorough research given that online you’re not going to deal with the lender face to face.
My tips for shopping for the best online lender:
1. Find out if they are a Lender or a Mortgage Broker – this is important as it might impact who you deal with once the loan starts. Traditionally, if you are dealing with a lender directly, they will continue to provide customer service to you after settlement, so you can contact them for any ongoing customer support. If you a dealing with a Mortgage Broker it can be a bit different, as some are likely to get your deal, hand you over to another financial institution and get paid a commission. You won’t have the support of dealing with this broker in the long run once the loan settles. A good broker will work really hard for you to get the best deal, regardless of the amount of commission, and they will be interested in maintaining a long term relationship, not just passing you over to another company if you need support.
2. The product being advertised on their website – some companies list cheaper looking products on their website to hook you in, but the product you end up buying might be completely different and can be more expensive. It is important to know which lender’s product the online broker is advertising on their website. If they are listing a cheaper lender’s product on their website, make sure before you actually apply that it is for that particular product . Good Brokers are supposed to deal with many different lenders to get you the best deal to assist you, but by only listing a few products on their website from just one of those lenders, doesn’t really represent what they are truly selling.
3. Is the online lender in control of the credit assessment – it is important to determine if the company you are dealing with are just taking an application and handing it over to a bigger financial institution to do the credit assessment and the deal. This means that the assessment process is out of their control and they are subject to another organisations rules and procedures. It can also add unnecessary time onto your application process.
4. How many different lenders is your application really being submitted to – if you apply online with a smaller broker, they could be taking your application and submitting it to a few different financial institutions for assessment. Each time an application is submitted, a note is made on your credit report. This could result in a large list of queries on your report, which will come up as questions when you apply for a loan elsewhere in the future.
5. After settlement, who will you speak to for customer service issues – it is important to know if the online lender will be your point of contact after settlement or if you will be handed over to another the financial institution/bank that they have placed you with. This can be frustrating because you think you are buying through one company, but they have taken a commission payment and have handed you off to somebody else. So it is important to ask who you will turn to for support after your loan has settled before submitting your application.
6. Does the lender have an Australian Credit Licence (ACL) and what name is it under – it is illegal not to list your ACL number on your website. If the lender doesn’t do this, there might be a good chance that they don’t have a credit licence. This represents a dodgy lender. If the online lender does have a credit licence number, be careful if it’s in somebody’s personal name rather than the company. This represents a small organisation pretending to be something that it’s not.
7. How long has the company been in business – if the company has only just started up, you need to find out what experience they have in lending. This will be important so you are taken care of and get the best level of service.
8. How many staff work at the company – you need to find out if the online lender you are dealing is small, medium or large. Is it just a small operation with a couple of staff and with a nice looking website?
9. Does the company have an office address – does the company have a proper office address or are they are working out of a residential address or a small non-commercial space. A good sign of whether an operation is legitimate is if they have an office where their staff are based out of.
Some facts about loans.com.au
• loans.com.au is not a mortgage broker. We are a brand of and owned by FirstMac Limited who has been in business for over 32 years. By coming to loans.com.au you are coming directly to the lender as FirstMac funds all of our loans.
• We have our own customer service centre based in Australia. After your loans settles, you will remain a loans.com.au client. We will still be here looking after you, as we are interested in developing and maintaining a long term relationship.
Our credit team is in-house (they actually sit on the same floor as us), so we can quickly answer your questions and do the assessment. We aren’t passing this funder assessment process out to a 3rd party.
• When you apply at loans.com.au, you are only making one home loan application. This is the only one that will appear on your credit report.
• Our Australian Credit Licence number is ACL 290600 under our parent company, FirstMac Limited. You can look up our ACL on the ASIC website.
• The loans.com.au brand has been owned by FirstMac for over 12 years with the amazing foresight to launch an online home loan company when consumers were ready. We did that in 2011 and are already leading the market with our innovative concept and products.
So finally, it is really important that you do your research behind some of these new online lenders. If they aren’t very clear with the above information, you’ve really got to question if the risk is worth it.
Please call us on 13 10 90 if you have any questions.
By Marie Mortimer. You can follow Marie on Google+
Image credit: efffective.com