The home loan industry is being flipped on its head, with lenders openly bidding against each other through on an online marketplace to win a would-be borrower’s business.
These so-called reverse auction sites are not especially new but their number is growing. Macquarie Bank-backed Lendi led the charge in 2013, followed by Flongle and a range of other platforms, including HashChing, LoanDolphin, Lodex and Joust. One of the newest players to enter the market, Loanbid, opened its doors in March 2018.
The basic principle of reverse auction sites is pretty straightforward. Loanbid partner Paul Dwyer says customers make one online application listing their details and loan requirements. Borrowers state whether they’re looking to buy a home or refinance an existing loan, nominate their preference for a fixed or variable rate, and tick off their choice of features such as redraw or offset.
From here, lenders and brokers assess the information provided and enter into a virtual auction, aiming to win your business with their best bid. All offers are shown on an online dashboard (lenders can also see what the competition is offering) and are ranked according to the total cost of the loan, with the lowest cost first.
“Borrowers need to wait for just 48 hours for lenders and brokers to come back to them with a loan best suited to their needs and financial situation, with the borrower to choose the right loan,” says Dwyer. He says borrowers are free to leave the process at any time, and there is no obligation to accept any of the loan bids.
It all sounds very appealing – quick, effortless and seemingly without the need for a make-or-break visit to a bank manager. “We put the power of choice back in the hands of borrowers, who can potentially access thousands of loans based on the information they provide through an obligation-free bidding process,” says Dwyer.
This story is from the August 2018 edition of Money Magazine Australia.
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This story is from the August 2018 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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