Borrowers who do not consider online lenders are potentially missing out on $3,184 in savings every year, according to research by a financial comparison site.
A national survey conducted by Mozo has revealed most borrowers are reluctant to apply for a home loan online.
“Our research shows while more than half of consumers are comfortable taking out car insurance, credit cards and personal loans online, just 27 per cent would consider doing the same for a home loan,” Mozo director Kirsty Lamont said.
“Surprisingly, less than half of consumers would consider getting a home loan with an online lender despite the majority saying the main drawcards of signing up with an online lender are cheaper interest rates and lower fees.”
The study looked at 504 home loans with 89 providers to determine which home loans provide the best value. It found that two-thirds of the best value home loans come from online lenders.
“We found that online lenders are on average 0.70 per cent cheaper than the big four banks for a typical loan of $350,000 over 25 years. When you look at the room for savings, it’s well worth looking beyond the traditional bricks and mortar lenders,” Ms Lamont said.
The most significant factor preventing Australians from getting an online home loan is a lack of education, with 56 per cents of respondents saying they did not know enough about them. In addition, 43 per cent of respondents said they would avoid researching online because they would prefer to speak to a mortgage expert face to face.
“Seeking expert advice from a third party might be a valuable service in navigating the mortgage application maze, but this could come at a steep price if borrowers neglect to do independent research beforehand,” Ms Lamont said.
“Many borrowers who go through a bank or mortgage broker often don’t get to see the full spectrum of offers available and may be unsure of what rates are available elsewhere, especially in the online space.”
The research also revealed that males are more likely to consider applying for an online home loan, and half of those who would apply online are aged between 25 and 44.