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

  1. Use comparison tools, such as RateCity’s Home Loan Comparison Chart, to research lenders online, including ratings for each product.
  2. Find out what services they offer to meet customer demands.
  3. Test their call center and online chat service.
  4. Read the lender’s online reviews, especially the feedback it has received on social media.
  5. Make sure they have a comprehensive, easy-to-use website. If they bury things like fees and charges, that could be a red flag.

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