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Online Home Loans

An online home loan could save you thousands. Here’s what you need to know.

Online Home Loans

Though the online mortgage industry has only been around for a few years, they are growing in market share. Find out why millions of Australians are opting for an online home loan.

Are online home loans safe?

The first questions we’re usually asked about online lenders, and the answer is yes. In Australia, all lenders, including those online, are regulated. Legitimate lenders usually display their Australian Credit Licence (ACL) number on their websites, which you can look up on the ASIC register.

You might also be surprised to learn that many online lenders are actually owned by the major banks, though they trade under a different name, have different branding, and offer different products.

And of course, all the lenders we compare on our site have been verified by us.

You may also want to look for online reviews from other borrowers, which can give you an idea of how good the lender’s customer service is, and how quickly they respond to queries.

Lastly, keep in mind that since the lender is giving you money, instead of the other way around, as a borrower you risk is relatively low. If the lender goes under, your loan will likely be taken on by another company with no immediate change to the contract terms.

Now that we have the question of security out of the way let’s talk about online home loans.

Pros and cons of an online home loan

The benefits of an online home loan

Cheap interest rates

Because online lenders don’t have branches and front offices, their overheads are lower than the major banks. They’re able to pass these savings on to customers in the form of cheaper interest rates.

Few fees

Unlike the major banks, most online lenders don’t charge administration fees, including start-up costs and monthly fees. The cost of administering your loan is already included in the interest rate, keeping things nice and simple.

Flexible

Online lenders don’t have the same cookie-cutter approach that the big banks do when it comes to approving your loan. They have the liberty of being a bit more flexible with their customers.

Quick and efficient application process

Online home loan application forms are designed to be simple and easy to use. Applications are assessed quickly, and you can usually get approval within 24 to 48 hours.

Great service platforms

Since all their business is conducted online or over the phone, online lenders generally invest heavily in their online platforms. Whether it’s an app, a website, or an online calculator, their tools are designed to be user-friendly and simple to use.

Innovative products

As the market for online home loans continues to grow, more and more lenders are differentiating themselves by creating innovative and flexible products that are not available at a traditional bank.

Convenient

Online lenders don’t have any customer-facing offices, so you never need to go into the branch in person. You can manage your loan, online or on the phone, from the comfort of your own home.

Good response times

Because email and phone are their main forms of communication, online lenders are usually quick to respond to online queries and calls. Many also have a call back request option on their website, so you can arrange to speak to them at a time that’s convenient for you.

The down-side of an online home loan

No face-to-face interactions

If you’re the sort of person who wants to meet their lender in person, then an online home loan is not the right choice for you.

How do I compare online home loans?

Many online lenders don’t advertise using traditional media, so you may not see them on billboards or advertised on TV. Instead, you can find them on comparison sites like Savvy. We find the best online home loan rates from reliable companies and help you to compare them. Here are a few tips to help you find the best online home loan:

Decide what type of loan you want

Before you jump into comparing online home loans, you need to decide what type of home loan you want. Are you an owner-occupier or an investor? Do you need a low-deposit loan? Are you building or buying an existing house? Are you a first home buyer? You can find information about all these topics on our site.

Decide what features you want your loan to have

Do you need a fixed or variable interest rate? Do you want an offset account? Do you want to be able to put in extra repayments and take redraws when you’re short of funds?

Always look for the comparison rate

When you’re looking for the best online home loan rate, it’s a good idea to use the comparison rate instead of the interest rate. The comparison rate includes the interest and most of the fees, and it gives you a better overview of what the loan will cost.

Use online calculators

The calculators on our site can help you figure out how much the loan could cost you in dollar terms. It also gives you a rough indication of what the repayments might be so you can decide if they are affordable.

Read the fine print

Though most online lenders don’t have hidden fees, it’s always a good idea to check for any additional costs that might not be included in the comparison rate. For example, some features, like offset accounts, can come with additional fees.

Speak to the broker/lender

All advertised rates and fees are a guide. The mortgage rate you pay will be tailored to your individual circumstance. If you want to get the best online home loan rate, talk to your lender. They can give you a more accurate picture of how much you’ll really be paying, and may also give you tips on what to include in your application, so you get the best rate possible.

Got a question about online home loans?

Can I get a fixed-rate online home loan?

Yes. Online lenders offer fixed, variable and split rate loans. Fixed-rates are usually set for a period of 1-5 years. Savvy compares all these types of loans to help you find the best online home loan rate available.

Can I get a low-deposit online home loan?

Yes, you can. Most online lenders offer them. Just like the major banks, if your deposit is under 20%, you might need to pay for Lenders Mortgage Insurance (LMI). Some online lenders don’t use LMI and will charge you a risk fee instead. The risk fee is paid directly to the lender, instead of to a third-party insurer.

Are offset accounts, redraws, and extra repayments available with online home loans?

Yes, online home loans have all the features available at the big banks. If you have a fixed-rate online loan, you might find there are some restrictions on extra repayments and redraws. However, generally speaking, online lenders tend to be much more flexible than the major banks.

I’m a first home buyer. Can I get an online home loan?

Yes, many online lenders have products such as honeymoon rate home loan, that are specifically targeted towards first home buyers. These usually have low introductory rates and are available to people with deposits below 20%.

Can investors get online home loans?

Yes, online lenders offer loans for owner-occupiers and investors. Similar to most lenders, they’ll likely charge a slightly higher rate for an investment loan than for an owner-occupier loan.

Can I use a guarantor for an online home loan?

Some online lenders will allow you to use a guarantor, and others may not. It’s always a good idea to call up the lender and discuss it with them directly. They’ll be able to tell you what documents your guarantor will need to provide.