Increasing numbers of individuals are turning to the web to locate and apply for a mortgage – but exactly how all of this, and what would be the benefits and drawbacks of taking financial advice from the robot?
Around one out of three (35%) homeowners apply for their mortgages using a broker, according to a June 2022 Which? survey of over 3,000 mortgage holders. Of those, 8% had used an online large financial company, or ‘robo adviser’, for example Habito or Trussle.
Below, we reveal why people do – and don’t – use online mortgage brokers, and explain the primary differences between robo advisers and traditional brokers.
Why do people use online mortgage brokers?
Online mortgage brokers, sometimes known as ‘robo advisers’, enable you to search and apply for a mortgage on the web.
Our survey found a number of reasons for people using online brokers. The most common reason given was they wanted to compare the deals offered by a web-based broker using what they might find themselves.
Some people expressed a preference for indirect communication, with 17% saying they’d rather chat online than have a spoken conversation, while perhaps surprisingly, the desire for a 24-hour service was the joint-least-popular reason, with simply 12% saying it was important to them.
- I desired to compare how much of an online broker proposed with deals I could find myself (22%)
- I thought I’d possess a better chance of my mortgage application being accepted (20%)
- I like trying technology (19%)
- I think it is not as likely I’d be pressured into applying (18%)
- I would rather use a website/online chat than possess a phone/face-to-face conversation (17%)
- I thought it might be the quickest method of trying to get a home loan (17%)
- I thought it would be cheaper than utilizing a human mortgage broker (16%)
- I saw a billboard and chose to check it out (16%)
- I didn’t feel confident researching/applying for mortgages on my own (15%)
- I wanted a 24-hour service (12%)
- I thought it would be more trustworthy than a human mortgage broker (12%)
- I thought it might have access to more deals than a human large financial company (12%)
Are online lenders gaining popularity?
Although merely a few people in our survey had used a web-based broker, 34% of those who hadn’t done so said they’d contemplate it next time. 25 percent of (24%) said they wouldn’t, and 31% were unsure.
Perhaps unsurprisingly, younger borrowers were most available to the idea of an online broker, with 68% of those aged 18-24 saying they’d give one a go in contrast to just 35% of 60-69 year olds.
Speed was by far the largest factor in people considering car loan brokers later on, with 58% saying they thought it may be the fastest method of trying to get a home loan.
One in three (34%) said they’d consider it as that they like using new technologies, while 32% thought it would be cheaper than using a traditional broker.
Of people who would not think about using a web-based large financial company, probably the most popular reason was that they simply preferred handling a human being (72%).
What would be the benefits and drawbacks of using a web-based mortgage broker?
There are benefits and drawbacks to presenting a robo adviser as opposed to a human broker:
Pros of online mortgage brokers
Cons of online mortgage brokers
Whether a web-based broker is the right option for you'll very much depend on your circumstances – for example, if you’re remortgaging maybe it's a very straightforward process but if you’re buying the first home or are self-employed you might want a little more personal interaction.