Gone are the days where Australians were locked into the same bank they’d been with since they were a kid for every financial product. As technology has advanced so too has the way we choose to use and connect with our finances.
Online-based home loan lenders, such as Reduce Home Loans, have erupted into the home loan market in an effort to provide cheaper and more innovative home loan options to all Australians.
By basing themselves entirely online, online-based home loan lenders can compete with the big four banks in new and interesting ways – not just on price, but through technology and customer service.
Let’s explore how online-based home loan lenders can deliver greater value to your home loan experience.
The benefits of choosing an online home loan lender
1. Fewer overheads mean greater savings
One of the biggest advantages that online-based lenders have over traditional banks with brick-and-mortar branches is that they have fewer overheads. This means that online-based lenders are in a position where they are able to pass on savings to their customers. Not only does this allow them a competitive edge over the big four banks, but is part of why these lenders frequently win when it comes to customer satisfaction.
These savings may come in the form of lower than average home loan rates, fewer fees or cashback offers. Reduce Home Loans, for example, frequently breaks interest rate records by offering customers some of the cheapest rates around.
According to the latest Reserve Bank of Australia figures, the average variable owner-occupier home loan rate is 3.11 per cent. Whereas Reduce Home Loans offers an owner-occupied variable home loan rate of 1.77 per cent. This is a difference of 1.34 per cent, and on a hypothetical $300,000 home loan over 30-years, this equates to monthly repayment savings of $208, or $2,496 a year. These savings may mean paying for a weekend away with the family, and they more than cover annual energy costs for a household.
2. You love technology
Online-based home loan lenders are not only competitive in price but are often at the forefront of fintech innovation. If you’re the kind of person who loves technology, choosing an online-based lender may be a better suit for your finances. Many platforms allow you to completely manage your home loan through digital banking, including facilities such as an offset account or redraw facility.
For online-based home loan lenders to be successful they need both web and app based well-built platforms. This focus on technology-driven customer service can be a major advantage for some Aussie borrowers.
Keep in mind that if you rely on face-to-face customer service from branches, or have trouble with technology such as online banking or apps, this type of home loan provider may not be best suited to you. Online-based home loan lenders do have to be creative when it comes to customer service because of this. Meaning that the service offered may be more hands-on and innovative, such as using video calls with some customers.
3. Less bureaucracy means more innovation
The bigger the corporation, the more bureaucratic red tape that’s deployed, and the greater number of board members and executives who need to sign off on every decision. This can be a real hindrance to innovation in any sector, not just finance.
Online-based lenders are able to offer greater innovation, whether through helpful fintech tools and programs or never-before-seen home loan offers. It also means this type of lender can be quicker on the draw when it comes to adapting new technology, such as offering Apple Pay, Google Pay or Samsung pay immediately. This prevents customers from waiting years to join in and use the latest tools that are commonplace globally.
4. Easier application process
It’s no secret that one of the biggest barriers to applying for or refinancing a mortgage is the paperwork involved. Locating and scanning documents can take hours, if not days if you’re battling with missing papers and long queues at the branch.
Online-based home loan lenders will generally all offer easy, online applications. This can make scanning and uploading documents take a matter of moments. And the latest form technology may mean crucial information, such as your personal details or property purchased details are preloaded, saving you from repeating basic information. This may mean that pre-approval is only 15 minutes away for the average would-be buyer.
This can be especially helpful when it comes to refinancing. The expected savings from refinancing to a lower rate loan or a lower fee loan, for example, can often be outweighed by the perceived effort and time involved. Fast and easy online applications can cut down the time it takes to refinance significantly.