Getting a mortgage traditionally often comes with strict restrictions and a large deposit to get a new home. However, there is one word that describes the way people are applying for mortgages today – fintech.
With the use of fintech (or financial technology), more and more Australians are applying for mortgages from private lenders and mortgage brokers like Blutin Finance. Now banks have competition. Now there are ways through the use of technology that allow people to find a better deal for them from willing investors.
A consumer-centered Approach
Whereas the mortgage process was in the past usually centered on the bank and what rates you could apply for, now the wealth of private lenders who are looking to invest offers the chance for those wishing to borrow to find a service that is centered on them.
With the prospect of owning a house now seeming like a distant dream for some due to the growing price of even the smaller properties and inflexible policies of conventional banks, now the process has been upturned by businesses wanting to negotiate, lend and help people wanting to climb onto the financial ladder.
What Kinds Of Lenders Are There Today?
There are 3 main types of lenders today. These are traditional banks and organizations like APRA (the Australian Prudential Regulation Authority), which lend traditionally; non-banks, which are lending services that do not conform to APRA rules; and person-to-person lenders, which are similar to those who invest in high net worth companies.
Although APRA has spent time trying to restrict the ability of non-banks and person-to-person lenders from starting, a private lender can enter the industry if they can show a history of dealing with finances. These private lenders are offering competition to traditional services and are using financial technology to reach out to prospective customers.
What Does This Have To Do With The Mortgage Industry?
Fintech allows potential borrowers to access a wide range of lending options. With a range of flexible rates set by private enterprises such as Fintech companies like Hashching and Quantum Finance, homeowners can now ask for financial backing from wealthy private investors looking to enter the Fintech market.
Hatching chief operating officer Siobhan Hayden describes the process as finding out more about the applicants and then advertising their wants and needs to potential investors. If the investors can find a deal that they want to take on, they can invest through Hatching. This allows for greater flexibility and a lender who is directly interested in the borrower.
While Quantum Finance does not solely deal with mortgage lending, they use cutting-edge technology to assess the relevant customer data and this has led to some success in introducing Artificial Intelligence technology into the mortgage industry. With their developments, we could see mortgage borrowing becoming an automated system before long.
Why Is This New Method Successful?
A new generation of borrowers is wanting to find more offers from a range of sources. We now live in a society that has an abundance of choices for everything they could want – why would mortgages be any different?
In an industry that has had next to the competition, traditional mortgage lenders are not huge fans of the new kids on the block. ARPA has made it difficult for new investors and organizations like Hashching to enter the market. But they’ve not been stopped.
This new method for finding a mortgage, assisted by technology, allows customers to find what they want, when they need it, from a variety of sources. Instead of having to fit into what the bank wants people to accept, now they can find a loan that is perfect for them and has the investor interested in the borrower succeeding.
Technology is changing the world we live in every day, and that includes the mortgage industry. By accessing data from our online personas and allowing for a greater level of granularity who is lending and how we judge those who are borrowing, we enter into a new age of technology changing the world of money lending that will allow more help for people clambering onto the ladder.
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