You could be missing out on some competitive home loans if you're not looking online.
Welcome to our guide about online home loans. Using this page you can compare online home loans and brands, enquire about home loans and speak to an expert broker if you'd like to.
Shopping online has become synonymous with getting a cheap deal and home loans are no different. Here are some different types of loans you could get:
- A home loan from an online brand
- An online-only home loan from a regular bricks and mortar lender
And you might be able to get attractive interest rates along with useful features.
Home Loan Offer
With the loans.com.au Essentials Variable Home Loan enjoy a home loan with no application or ongoing fees as well as a competitive interest rate. Borrow up to 80% of the property's value. For owner occupiers and principal and interest repayments only.
- Interest Rate of 3.59% p.a.
- Comparison Rate of 3.61% p.a.
- Application Fee of $0
- Maximum LVR: 80%
- Minimum Borrowing: $50,000
- Max Borrowing: $1,000,000
Online home loans and online brands
Rates last updated March 30th, 2017.
- loans.com.au Essentials - Variable (Owner Occupier, P&I)
Interest rate now 3.59%
October 4th, 2016
- ME Basic Home Loan - LVR <=80% Owner Occupier
Interest rate decreased by 0.10%
January 4th, 2017
Aussie can save you time and effort by helping you research, organise and apply for your home loan. They compare thousands of home loans to help find the right deal for you. Fill out the form on the left and an Aussie Mortgage Broker will meet you at a time of your choosing to discuss your needs and help you find the right home loan.
Compare online home loans for March 2017
|Loan||Interest Rate (p.a.)||Comparison rates (p.a.)|
|loans.com.au Essentials - Variable (Owner Occupier, P&I)||3.59%||3.61%|
|Switzer Home Loan||3.89%||3.89%|
|loans.com.au Essentials - Variable (Investor, P&I)||3.79%||3.81%|
|ME Basic Home Loan - LVR <=80% Owner Occupier||4.09%||4.11%|
What is an online lender?
Online lenders issue home loans to borrowers using a secure website as the major source of communication. Most online banks will have strong call centre support and state of the art online banking facility to make up for the lack of face-to-face communication. These lenders don't have branches. For what they lack in face-to-face communication, they make up for in cost savings, which can be passed on to borrowers in the form of cheaper loans.
Note that some of the loans displayed on this page are online home loans, but do not come from online only lenders. These particular home loans are instead, online-exclusive loans offered by regular banks.Back to top
Are online lenders safe? What happens to my property and mortgage if an online lender goes bankrupt?
This is a common question. People want to address the uncertainty of dealing with smaller, lesser known lenders — which is entirely understandable. It is far less of an issue dealing with a bankrupt organisation who has lent you money as opposed to getting your money off a bankrupt business you've invested in.
The most likely result is that the 'books' (the loans of the company) will be sold off to another existing lender and the loan will continue much as it did before
Phil Naylor, CEO of the Mortgage & Finance Association of Australia.
If you consider the example of the Commonwealth Bank's buyout of Bankwest years back. It's exactly the same as if an online lender was bought by another institution.
If you are concerned about the safety of an online lender, you should check that they have a Australian Credit Licence (ACL). Lenders should list their ACL number at the bottom of their webpage. This number can be cross-referenced with ASIC Connect's Credit Licensee (who are licenced themselves) and Credit Representative (who are allowed to operate under a licensee's licence) databases.
Lenders legally need to have an ACL and consumers have access to greater legal remedies in disputes when they have borrowed money from a business with an ACL.Back to top
What protection do I have as a borrower?
There are a number of regulations in place to protect the borrower. The Consumer Credit Code looks after all credit transactions in Australia. The code states that all lending institutions including mortgage brokers must tell you what your rights are and obligations to any credit arrangement.
Credit providers are required to truthfully disclose all relevant information about your contract including interest rates, commissions, fees and any other information you request. All banks are also regulated by the Australian Prudential Regulation Authority (APRA) to ensure financial promises are made by institutions they supervise.
If you feel as though your service or product was not up to scratch and would like to submit a complaint, you can submit an internal complaint through the institution's internal resolution process. If you're unhappy with the resolution, you can submit a dispute with the Financial Services Ombudsman.
It's important to note that the FSO only considers disputes involving providers that are members of their service. Before you commit to a provider, check if they have this membership.
Why should I choose an online home loan or lender over a big bank?
There many reasons why you may want to consider choosing an online lender over a bricks and mortar lender.
Here are some reasons why you might choose to go for an online lender:
- A lower interest rate
- Lower fees
- More transparency
- More flexible features for a lower interest rate
- Innovative products
- Fast approval process
- You are happy to manage your mortgage over the phone and online
Fully featured, low interest rates
Smaller lenders, especially online lenders, tend to have lower interest rates than the larger lenders. Which is even better when you consider that the cut rate interest products offered by some of the online lenders are also fully featured with 100% offset accounts, redraw facilities, split accounts and no monthly service fees. Whereas the cheapest interest rate loans with the major banks might not offer these flexible features.
Although experts such as Financial Advisor Robert Dawson suggest that smaller lenders such as credit unions and building societies have restricted access to funds, when compared to larger lending institutions, there may be a small margin applied to lending rates. However, this can be recouped by borrowers through choosing a plain vanilla loan.
Better, customised service
Online lenders are known for a better customer service experience. Heidi Armstrong, Director of Operations at State Custodians says, 'what you find generally with these types of lenders is that the people on the other end of the phones have to be qualified credit professionals, not customer service agents — these credit agents can help customers structure a loan to suit their circumstances.'
Online lenders can allow you to borrow more money for your home loan than a major lender according to Dawson, as they can make personal assessment of your financial habits. The large lenders put your financial details through a computer program which doesn't take into account many of your past financial behaviours. The big banks deliver a one-size-fits-all risk management approach. But smaller lenders can be more accommodating.
For example, the big banks use the total credit limits of your credit cards to work out your debt levels. Online lenders usually have the flexibility to look at how much you actually put on your credit cards as opposed to your total available credit card limits. This allows home loan customers to potentially borrow more money with an online lender than with a big bank.Back to top
Would there be any situations when I shouldn't use an online lender?
Borrowers in regional areas may have to consider a regular lender as some of the smaller online lenders aren't able to lend money for properties in regional areas. In the mortgage world, rural areas are regarded as riskier security, and many online lenders don't have the size nor expertise to handle these types of loans. When purchasing a rural property, it is worth asking around for the lenders that permit home loans for regional areas.
You're not tech-savvy
If you're uncomfortable with using the Internet for your banking, or you'd prefer face-to-face communication with your lender, then an online lender would not be able to meet your needs. All, if not, the majority of transactions that you conduct will be online.
Why choose an online lender over a mortgage broker?
Firstly, to touch on the basics, an online lender is a provider of loans. The online lender will fund these loans themselves. A mortgage broker is essentially a middle persona who helps a borrower choose and apply for a loan from the broker's list of lenders. Mortgage brokers don't fund the loans themselves, but use products from various external lenders. They are usually paid by commissions on the loan from the lenders.
The best online lenders will offer loans at rates that can't be matched by mortgage brokers. As loans sold through mortgage brokers include an expensive commission component, this adds to the costs for the lender - which are inevitably passed onto the borrower.
From another perspective, going direct to an online lender will mean that they will only offer you loans from their business, whereas a broker can offer a variety of loans from different lenders. It is really a matter of choice and service. If a customer doesn't want to do the searching and researching of loan products online before they commit to a mortgage, then perhaps the best option for them is to go to a mortgage broker, who can guide them through the process and conduct some of the process for them and some of the process with them.
Another service aspect of mortgage brokers is that they are able to access wholesale rates and deals which may be unavailable to the direct retail market.
Both mortgage brokers and online lenders can assist borrowers in applying for loans, and first home buyer grants and can a be a very useful guide to a buyer to help them decide which of the many various types of loans should be chosen for their particular situation.
Frequently asked questions about online home loans
Can an online lender help me with a personal loan?
There are a number of online lenders that offer personal loans as part of their product mix. This includes loans.com.au, Gateway CU, GE Money, NRMA, RACV and Society One.
Do online lenders loan up to 95% LVR?
Yes, there are number of online lenders that offer 95% LVR and low deposit home loans.
Do online lenders offer salary packaging?
Yes, most online lenders do offer salary packaging.
Will online lenders check my credit file if I do decide to apply?
Yes, online lenders function like a regular lender and perform credit checks on all applicants who want to apply with them.
If you're currently experiencing bad credit, there are bad credit lenders who are available to assist.
What type of documents would I need to send to an online lender?
You are required to supply the typical documents when applying for a home loan.
This includes: your birth certificate, driver's licence, details about your finances and employment.
Depending on which stage of the loan process you're at, you'll be asked to supply your contract of sale and certificate of title.
Would I be liable for early repayment fees with my online lender?
This will depend on the terms and conditions of the product that you apply for. Online lenders tend to charge less early repayment fees compared to the bigger banks.
If you have any questions about your home loans and the fees involved, it's best to speak to your lender directly.
Is it possible to get a mortgage without a deposit?
Post GFC you can only apply for a no-deposit home loan with a guarantor or guarantee.