Online lenders challenge big banks
While the RBA leaves the cash rate on hold, new research has found the average home loan customer could save $82,000 by switching from a big four bank to a low-rate online lender.
Comparison site RateCity urges home loan customers unhappy with the behavior of our major banks to shop around.
New calculations show that a family with a $350,000 loan looking for a full mortgage could save up to $82,118 over the life of their loan by choosing the lowest comparable online lender , instead of a major bank.
RateCity spokeswoman Sally Tindall said the only way to give the majors a wake-up call is to vote with your feet.
“The big four banks have an incredible 75% share of the home loan market. If you’re fed up with what’s coming out of the Royal Commission, now might be the time for a change.
“Online lenders are increasingly offering comprehensive loan products – at significantly lower rates,” she said.
For example, the big four advertise full loans for around 4.5%, along with hefty package fees of $395 per year, while some of the smaller lenders offer fully flexible loans for as little as 3.49% , with a 100% Clearing Account and no ongoing fees.
Facts About Online Lenders
- About 30% of lenders in the RateCity database are online.
- Australia’s fifth largest property lender is online only (ING).
- Nine of the 10 lowest rate lenders in our database are online lenders.
Tips for choosing an online lender
- Use comparison tools, such as RateCity’s Home Loan Comparison Chart, to research lenders online, including ratings for each product.
- Find out what services they offer to meet customer demands.
- Test their call center and online chat service.
- Read the lender’s online reviews, especially the feedback it has received on social media.
- Make sure they have a comprehensive, easy-to-use website. If they bury things like fees and charges, that could be a red flag.