Online Mortgage Lenders - Proceed with Caution

"At first glance obtaining an online home loan may look attractive especially if the website offers in-built loan calculators, rate comparison, loan options or accepts electronic applications.  But at the end of the day no internet tool is able to provide tailored home loan advice nor the opportunity to communicate with financial experts," says Mr Maynard.

"Online services do not assist the homebuyer with loan selection or, when there is a loan option tool available, does not account for an individual's needs and requirements."

"Why anyone would make the largest financial decision of his or her life without talking to a home loan expert is beyond me," he says.

Brokers take into account a homebuyer's reasons for purchasing a property, the costs involved and the homebuyer's financial circumstances before making a home loan recommendation.  The most appropriate loan structure is a balance of price, product and service.

Home loan websites are unable to consider all these factors, and as a result online loan recommendations are often flawed.

When using an online service the borrower misses out on the consultative approach that a mortgage broker like The Mortgage Store can offer.  This is especially important when an unusual loan structure is required or a self-employed person is looking to borrow.

"Whilst online services provide the basic details on loan pricing and features, they do not go far enough in explaining the pros and cons of the features.  In contrast, mortgage brokers are finance experts with in-depth technical knowledge of the home loan products and structures available on the market," says Mr Maynard.

"Homebuyers are better able to understand which loan features are worthwhile and which ones are just marketing hype when someone is able to cut through the jargon, explain the machinations of the loan in non-technical terms and ensure the homebuyer fully comprehends the loan structure."

"What many homebuyers don't realise is that online home loans aren't any faster or cheaper than those offered by mortgage brokers.  As the finance industry does not accept electronic signatures, online applications still need to be completed by hand.  In addition the cost of taking out a loan online is the same without any tailored home loan advice," he says.

The Mortgage Store has been successful in converting website enquiries into home loans by recognising the need for a consultative approach with potential homebuyers.

"We use our website as a marketing tool to generate enquiries but we do not offer a home loan solution online," says Mr Maynard.  "Websites claiming that they can provide this service are short-changing homebuyers by not offering comprehensive loan advice."

"Taking out an online loan differs greatly from other web-based purchases such as books, compact discs or computer games where customers are buying a known entity.  In the case of home loans, where the customer is making a life-long purchase, they need to know their decision is the right one," he says.

One such customer who sought expert loan advice from The Mortgage Store is Mr Ian Lee.  "My wife and I are nearing retirement and wanted to purchase an investment property. The Mortgage Store recommended a loan with an offset facility as the best home loan for my personal circumstances.  Initially I didn't see the need to structure my home loan with an offset facility but the consultant explained all its features and the financial benefits it would provide me. I took The Mortgage Store's advice and have been thrilled with the results," says Mr Lee.

"At the Mortgage Store we understand that everyone's circumstances vary and therefore treat all homebuyers as individuals.  This ensures we are able to recommend them the most suitable home loan from a broad range of products and structures offered by both bank and non-bank lenders," says Mr Maynard.

KB:     Q0017
Last Updated:     26 Sep 2006

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