Why robo-advice is not good home loan advice

Why robo-advice is not good home loan advice

An increasing number of ‘robo-advice’ home loan websites, which allow people to compare loans and then apply for finance online, have raised concerns for the mortgage broking community in Australia.

Here’s what you need to know.

Online versus face-to-face mortgage broking

Technology streamlines many areas of our lives, and in most cases, these advances are for the better. It’s never been easier to compare flights, hotels and other purchases online, which in turn allows consumers to find competitive deals and savings.

Problems arise when comparison and advice websites are used for high-value items, like property.

What to consider

  • A borrower cannot consult directly with a home loan professional online. This is a problem because every borrower has unique lending requirements, which should be taken into account when a broker uses their skills to pinpoint the most suitable home loan product for a client. Online lending platforms do not allow for this complexity.
  • Online lending platforms may be more convenient, but this is not necessarily a pro. A home loan is a long-term commitment, and simplifying the selection process arguably makes it easier for people to make impulsive decisions, without careful consideration. It may seem easier to get a home loan online, but the repercussions of choosing the wrong home loan, and spending more over the long term, are not worth the time initially saved.
  • Home loans are not one-size-fits-all products. A good mortgage broker does not just seek to find the most competitive loan for their client; they also look for a loan that matches your lifestyle, financial goals and other unique objectives. Big savings can come from knowing what product suits what individual, and often, these solutions are ‘out of the box’.
  • Online lenders may seem cheaper, but when it comes to residential home loans, most mortgage brokers do not charge their clients any fee at all.* Instead, the cost is passed onto the lender, who pays the mortgage broker directly. This is because the mortgage broker is doing the legwork that the lender would normally have to do.
 * Always check with your residential mortgage broker to ensure this is the case before moving forward, as some brokers may maintain different rules regarding fees.

Find out more

Our mortgage brokers sit down with you at your home, or in our office, and take the time to understand what kind of home loan is right for you and your family. We then recommend home loan products that save you money, and match your goals. Talk to us about getting started.

Financial Advice Disclaimer: This information is general in nature. Mortgage brokers do not provide financial advice. Clients seeking financial advice will be referred to a qualified financial planner.