Technology helps with low rates

Technology helps with low rates

Astute property investors are always sensitive to marginal differences in interest rates, and for good reason. A difference of just 0.50% in the rate of one mortgage compared to another doesn’t seem material, but on a $500,000 loan it represents $2,500 that could very well remain in your pocket.  Traditional channels for finding a loan include meeting directly with a lender, using a mortgage broker and visiting rate comparison sites.  Meeting directly with or calling lenders to find who will lend to you and at what rate takes time. Although some savvy investors feel comfortable negotiating with lenders, others prefer to avoid this process.

Engaging a professional mortgage broker can really help to fast track the search. As a professional, they are up to speed with the processes and technical requirements and have existing relationships with the various banks through which they can negotiate competitive rates for their customers.  For the busy, time poor investor,  employing a mortgage broker to do your rate shopping is an excellent option.

If you do go down this route, however, it is important that you choose a broker who will prioritize your  interests.  Investors need to be aware that the commission structures and incentives offered by lenders to brokers has the potential to influence the recommendation an investor receives. Current laws in Australia stipulate that a broker need not recommend  the best fit option, but rather asks that they do not recommend a product that is unsuitable.   Additionally, in some circumstances, broker commission structures are defined by set targets.  This has the potential to see brokers recommending products towards the end of the month trying to fill out their targets, rather than basing their efforts on finding the best deals for their customers.  Selecting an ethical broker and building a trusting relationship is crucial in order to mitigate this potential risk when taking this option. 

Rate comparison websites, on the other hand, have generally started to lose their relevance in a time when lenders are picking and choosing who they want as a customer and what rate they will offer.   More of an advertising campaign, than a service provision, rates listed on these sites tend to be a starting point and do not take into account factors that would allow a lender to discount their rate to an investor.  One way to think about these sites is as digital billboards.  Due to the static list of information they relay, they do not provide any scope for personalized rate discovery.

A relatively new option coming into the space is the digital online mortgage platform.   Through the development of sophisticated, automated algorithm based platforms,  customers are able to tap into live quoting services that enable the investors to receive personalised interest rates and cash incentives directly from lenders in minutes.   They act as a transparent gateway across the market, through which consumers can interact with a lender.  Built into this powerful engine are numerous customer profiles.  In order to test an applicant's eligibility for a discounted rate, all that is required is the input of high level parameters and the automated engine scours its lender databases to find the best matches.

The value proposition of these platforms is attractive to both sides of the market.  For the borrower, the process of price and brand discovery is fast tracked as a result can be achieved in only minutes online.  For lenders, the platform provides a bank with an extremely qualified sales list due to its opt in nature, at a minimized operational cost.

Being proactive in ensuring the cost of financing your property portfolio is kept low at all times will help maximise the upside of your investment. For many investors, finding and building a trusting relationship with a professional mortgage broker will deliver this outcome.  While rate comparison sites are fast losing their relevance, digital online mortgage platforms are stepping up to the plate, delivering investors with real-time access to the latest personalised rates in minutes from a diverse range of lenders. Now you have no reason to be overpaying on a mortgage.

 

 

 

 

 

 

 

Subscribe to our newsletter

Weekly updates Weekly headlines, delivered to your inbox

Join the conversation!

Suggested Stories:

Tasmania’s rise as an investor heartland

Tasmania’s rise as an investor heartland

Renovation revaluation strategy

Renovation revaluation strategy

Building a large portfolio through structured lending

Building a large portfolio through structured lending

The new frontier of property investment

The new frontier of property investment

The future of credit - price of mortgages

The future of credit - price of mortgages

Investor in focus: Guy Williams, part four

Investor in focus: Guy Williams, part four