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Mortgages at the click of a mouse25th September 2007 More Australians are choosing to take their home loans out with the click of a mouse but online loans aren't for everyone, a review of online-only mortgages by Australian Property Investor magazine has found. The key benefit of online-only loans are that they offer lower interest rates, according to CANNEX mortgage expert Michael Moran, who surveyed the field of online products for API. The nominal interest rates on online products are considerably lower than comparable products offered through traditional banking channels, Moran reports. "The average online rate of 7.25 per cent is 0.82 per cent lower than the average basic variable product offered by five major banks," he says. Online loans are best suited to homebuyers and investors who want a 'no frills' product that offers low costs by removing bells and whistles such as branch access and bundled banking, Moran concludes. API editor Eynas Brodie notes that property investors need to consider other factors apart from price. "Online-only loans often have limitations such as higher exit penalties and no option to make interest-only payments or have the loan act as a construction loan," Brodie says. "This means that if you're going to turn a property over quickly, online mortgages may not be best for you. "Clearly, online mortgages offer a cheaper product but borrowers need to be aware of what they’re giving up in order to save money. It's a matter of choosing the right loan for your own circumstances." © Australian Property Investor magazine - www.apimagazine.com.au. Reproduced with permission. To subscribe to API, go to www.apimagazine.com.au or pick up a copy from your local newsagent.
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