If you’ve never applied for a home loan online before, it’s easy to get nervous about making a major financial commitment with the click of a mouse or tapping on a smartphone. But online home loans have their advantages, which are often much safer than you might think.
Laws and regulations also apply to online lenders
Mortgage lenders in Australia, including online lenders, are legally required to follow rules and regulations that help protect borrowers.
If an online lender is an Authorized Depository Institution (ADI) that also offers savings accounts and term deposits, they are required to follow regulations issued by the Australian Prudential Regulation Authority (APRA). Online lenders who only offer mortgages are not governed by APRA, but must always follow the rules set out by the Australian Securities and Investments Commission (ASIC).
If you are wondering if an online lender is trustworthy, a good place to start might be to check their publicly available Australian Credit License (ACL). And if you’re having trouble with a lender, you can contact the Australian Financial Complaints Authority (AFCA).
Digital encryption protects your data
Applying for a mortgage online involves filling out online forms and uploading scans or photos of documents, such as ID, payslips, and bank statements. As such, you may be concerned that this sensitive information may be leaked online or made vulnerable to hackers, scammers, and identity thieves.
Online lenders (and traditional lenders too) use sophisticated encryption technology to protect the personal data of mortgage clients. Regular updates to their systems and processes mean you can be sure you’re uploading and digitally signing mortgage documents.
No paperwork means less risk of human error or worse
With little to no physical documents involved, an online mortgage application means that a postman, courier, or office worker has nothing to temporarily misplace, lose permanently, or forget to shred before they go. get rid of. This means you’re less likely to experience delays in your mortgage application due to delivery issues, and your documents are less likely to go missing or end up in the hands of scammers or identity thieves.
Automatic processes enable faster, more precise and more convenient applications
Rather than waiting until business hours so that you can call or meet with your bank or mortgage broker to complete your mortgage application, you can often apply for a mortgage online anytime, day or night.
Online lenders who use digital tools to collect and process mortgage applications may be able to tell you sooner if your home loan is likely to be approved, with less chance of human error leading to misunderstandings and problems.
That said, you’ll likely have to wait for a human employee to verify your request before your approval can be confirmed.
Reduced rates and fees
If you apply to a lender online only, you may be able to get a home loan cheaper than with some of the bigger banks. Since online lenders don’t have to deal with the costs of maintaining branch and ATM networks, they often charge less for home loans than major lenders, which can make you pay less in fees and costs. interest on your mortgage.
What are the disadvantages of online mortgage loans?
While online home loans are often more secure than you might think, they can still have limitations to keep in mind before you apply.
Applying for a standard home loan online can be a fairly straightforward process. But if your mortgage doesn’t tick all the usual boxes (e.g. low doc loans, construction loans), you may need to contact a lender and / or mortgage broker to work out a loan structure. that meets your needs.
Online lenders are often smaller operations than large banks, which can allow them to offer cheaper deals and more personalized customer service. However, it can also mean having fewer loan options to choose from, or missing some home loan features. And depending on the size of their team, you may have to wait longer until an employee is available to process your request and / or process your application.
If you’re not sure whether an online lender is the best choice for your mortgage, consider contacting a mortgage broker for advice.