It is reported that online banking is the most used digital service in the UK right now. Mobile banking is the preferred way for most people to handle their finances, so why shouldn’t you be able to apply for a mortgage online?
Data shows that finding a mortgage online will soon jump in its numbers. Since the economic downfall in 2008, the amount of mortgages taken out has declined from 74% to 52%. Online mortgages may be what the industry needs to boost numbers and help house hunters become home owners.
Whilst searching for a mortgage online can be quicker, more convenient and much more hassle free, they could be confusing for those who are not familiar with the processes. The rise of online mortgage brokers has aided the situation, as they can help to make sense of interest rates and online applications, which can be especially puzzling for first time buyers.
Taking out a mortgage online can also multiple the number of products available, as well as making the procedure quicker once a choice has been made. However, it can be hard to get in contact with an actual person, should you need help with the application. Here we have collated a list of advantages and disadvantages of getting an online mortgage, to help with the decision on whether you should take this route or not.
The Benefits of Applying for a Mortgage Online
For many, the benefits of online mortgages heavily outweigh the disadvantages. This is of course is dependent on how comfortable you are with digital technologies, linked with how much you know about mortgages.
Here are some of the main advantages of searching and applying for a mortgage online;
- The first thing that will draw many customers to the online market is the wide range of deals that are available digitally. Online lenders can show real time offers as opposed to traditional lenders, such as banks and building societies, who will have a pre-prepared portfolio of products.
This will allow customers the freedom to search across the market to compare deals from different lenders to find the very best interest rates. Online mortgage broker sites will allow potential borrowers to adjust their specifics, such as the type of mortgage they are after, how long they want their repayment period to be and how much they would like to borrow. They will then provide detailed information that the customer can work with in real time.
- Using an online mortgage scheme may also prove to be less hassle than working with the traditional procedure. This way, you will not have to book in meetings with a broker or a lender during their working hours. You can work the mortgage process into your own schedule and not have to work your day around that of the loan provider.
Filling in your financial information online saves heaps of time filling out paperwork to the upmost detail as is required in the traditional route. You will have more control over your information and it is quicker and easier to change any information that may be incorrect. Errors in paperwork can be the detrimental to the outcome of your application. With online, it is easier to rectify – giving a better chance of being accepted.
- An online mortgage can also offer more flexibility should your financial situation change. It is easier to adjust a payment plan online and can also ensure you’re in charge of the situation. Meeting with a lender in person can tip the scales in their favour, whereas changing a plan online means you can calculate the adjustments needed and request the appropriate modifications.
- Contrary to what many may believe, most online brokers and lenders will have a built in real time client chat service on their sites. These are integrated customer representatives or help desk style features, allowing customers to ask and receive answers for any questions they may have. A lot of the sites can troubleshoot any problems you may occur before you even need to come into contact with a representative. Websites may have fact sheets, how-to videos, FAQs pages or sample projections that compare annual percentage rates (APR) and payment and fees across different lenders. This is useful for those who don’t have much prior experience with mortgages, but still wish to take the online road.
- Online mortgage lenders also offer a lot more interactive elements, which can be very useful when deciding upon which deal to opt for and how much you can afford to borrow. A lot of sites have built in borrowing and repayment calculators customised for different personal circumstances. As a bonus, most of these services are free to use. As well as this, increased amounts of online lenders are creating mobile apps to help with managing with closing process and to offer access to the status of the application. This can also help with editing documentation.
- Mortgages available online may also offer lower interest rates as they do not have to pay for physical branches, offices or staffing. These lower operating costs means they can afford to provide low interest rates and service fees.
With this, many online providers may also have more room for negotiation and consideration for those with low credit scores. This is a great option for those struggling to be accepted by traditional lenders.
Things to Consider
Despite the arguments stacking up in favour of applying for an online mortgage, there are things you should think about before choosing for this option.
Here are some downsides to selecting the digital route;
- Although most websites do have a chat service available, when it comes to the most important aspect of your mortgage, it may be harder to get in contact with someone from an online lender company. There may typically be a lesser sense of customer service and phone numbers or email addresses may be more difficult to find. It can also take anywhere from a couple of hours to a couple of days for the companies to get back to you once you manage to get in touch.
Without this customer service, it is easy for customers to misinterpret online forms, and these small errors could be the difference between application rejection or approval.
Before settling for an online provider, check their customer service procedures and protocols and decide how much help you’ll potentially need.
- The internet can change overnight, and as can online mortgage interest rates. The rate you found the day before may be higher than what it was previously. If getting the lowest rate is the most important thing for you, be ready to walk away from an offer that keeps raising its interest rate on a daily basis.
- Lastly, it is important to be wary of scams. If it seems too good to be true, then it probably is. The easiest way to spot a scam mortgage offer is if there is any kind of upfront payment. This may be for a quote, for example. You can check the Better Business Bureau to separate legit offers from those that are fake.
If you’re comfortable with the world of digital technologies, the amount of benefits offered from an online mortgage may be very appealing. Having a wider choice of products, lower interest rates and a quicker and easier application process all come with an online mortgage.
However, if you think you’ll need more help on your journey to becoming a home-owner, then the face-to-face interaction offered by traditional mortgage brokers and lenders may be the better option. Like most things, taking the plunge into the world of online mortgages is down to personal judgement.
This is a collaborative post.