Buying a mortgage online
When you're buying a mortgage, you can often save on the cost of the deal by buying online rather than on the high street. Do it well, and you can almost certainly find a cheaper deal than you would elsewhere. On this page, I'm going to share with you an explanation of the benefits of buying your mortgage online, and also some tips for doing it well. Let's begin with the benefits.
You can do it without leaving home, at any time
The convenience of shopping online makes a big difference. It means that you don't have to leave your house in the rain or the cold. You don't have to trudge down the high street talking to one bored bank manager after another.
You may be thinking "I save an afternoon. What's the big deal". The fact is, if you try to buy a mortgage by walking around town in person, you're going to quickly get bored, tired and uncomfortable. That increases the temptation for you to just take the first deal on offer, when really you should keep on looking round for a better mortgage deal elsewhere. So shopping for your mortgage online reduces the temptation to just call it a day and go with a sub-optimal deal.
Then there's the fact that for many of us, spending a couple of days looking at mortgage deals in person just isn't possible. To begin with, there are the people who find it physically difficult to get out of their home and look around mortgage brokers. That might include the ill, the elderly, and those living in isolated rural communities without many banks nearby. Then there's another group, the people who are working all day and consequently don't have any free time while the banks are open. Trying to cram the process of choosing a mortgage - one of the biggest financial decisions you'll make - into lunch breaks and saturday mornings just isn't a good idea.
You avoid the hard sell
We all like to think that we're rational consumers, especially if we're dealing with something as supposedly unemotional and black-and-white as a mortgage. But the reality is that when you're faced with a persuasive salesman, it's all too easy to be charmed by his words, and to accept a bargain that you wouldn't have chosen otherwise. By shopping online you avoid this entire problem of reasonable-sounding young men brow-beating you into signing on the dotted line for a mortgage you'll regret later. If a lender wants to sell to you online, they'll be forced to do so by offering a better bargain, not simply by hiring better salesmen.
Cheaper for mortage lenders means cheaper for mortgage buyers
Building a website is much, much cheaper than building a bricks-and-morter bank branch. Mortgage lenders with physical branches have to sink hundreds of thousands of dollars into setting up the branches in the first place, then thousands or tens of thousands each year maintaining it. By contrast setting up a website - even the complex, secure kind of website you need to become a trusted mortgage seller - is cheap.
And remember the golden rule in a market as competitive as the mortgage industry: if you make something cheaper for the lender, you can persuade them to pass that saving on to you. So you can often get a lower price online than offline.
Easier comparision
Another reason why online mortgage sellers will offer better deals is that they have to. They know that mortgage-buyers shopping online will be checking perhaps a dozen different sites, and that if they don't offer a competitive package they'll be straight out of the running. That isn't quite so true in the offline market. Big, well-known banks can rely on a certain number of customers no matter how bad the rates they offer - because so many people are sheep who don't comparison-shop.
A particular outcome of the easier price comparison online is that you avoid being misled by the volatility of the mortgage market. If you are shopping offline, it is quite possible for the market rate of mortgage-selling to change from day to day. This makes it impossible for you to directly compare the mortgage that Lender A offered on Monday with the mortgage that Lender B offered on Friday.
How to go about mortgage-shopping online
Now that you're - I hope - convinced that buying your mortgage online is a good route to take, how do you go about it? Well, like when you're shopping offline, you need to look around for all the lenders you can find, and then filter some of them out. It's easy to find mortgage lenders online. Almost all the lenders you will have come across offline also have an online presence, and many of them will let you buy mortgages online. There are also online-only lenders, and a lot of sites which rate and link to these lenders.
Once you have a list, you'll want to filter out the ones you don't like. This includes the 'lenders' who look like outright scammers - sites with no contact details on them, that look like they've been put together by idiots. You'll also do well to check the reputations of online lenders, by looking for the negative commentary about them elsewhere on the internet. This can help you to filter out the really bad, unreliable lenders, leaving you with a shortlist of organizations which you would consider buying a mortage from.
Armed with that list, it's time to comparison shop. Look for answers to the same questions you'd be asking in a bank: questions about rates, questions about terms, questions about the catches, the charges, and the conditions they'll impose on you. Don't be shy about sending an email or picking up the phone if you need information that isn't listed on the website: if the lender is at all trustworthy, they'll be glad of the opportunity to explain their system to you. From this point on, the process of mortgage-shopping online is very similar to doing it offline, and you might be able to get yourself a good bargain.
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