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There’s a lot to consider when buying a home, but your home loan will be one of the most important factors. You want to choose a home loan that suits your current situation and it is equally important that your chosen lender aligns with your vision and preferences for your home ownership journey.

One thing to remember is that you aren’t tied to one lender for the rest of your loan repayment term. In fact, it’s a good idea to consider [refinancing](https://www.lendi.com.au/owning-property/refinance/) roughly every 2 years. So, if you end up being unhappy with the lender you choose, you can switch in the future. 

An online lender is one that operates exclusively online and does not have branch access. On the other hand, a brick and mortar lender typically works like a traditional bank with physical branches and everyday banking services, but also offers loans (e.g. [NAB](https://www.lendi.com.au/home-loans/lenders/nab/), [Commonwealth Bank](https://www.lendi.com.au/home-loans/lenders/commonwealth-bank/), [ANZ](https://www.lendi.com.au/home-loans/lenders/anz-bank/) or [Westpac](https://www.lendi.com.au/home-loans/lenders/westpac-bank/)). 

In this article we’ll explain some more of the differences you are likely to experience between an online lender and a brick and mortar lender. 

- __Related:__ [Home loan hacks for 2021: how to get the best rate post pandemic](https://www.lendi.com.au/inspire/finance/home-loan-hacks-2021-get-the-best-rate-post-pandemic/)
- __Related:__ [A beginner's guide to buying your first home](https://www.lendi.com.au/inspire/finance/buying-your-first-home/)
- __Related:__ [How to switch mortgages and save](https://www.lendi.com.au/inspire/finance/how-to-switch-mortgages-and-save/)

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## 1. Rates, loan features and offers
### Online lender: Cheaper mortgages and lower interest rates

Online lenders typically have fewer overhead costs meaning they can pass these savings onto you as a borrower. Owning or renting out a physical space is very expensive; you have to factor in other costs such as cleaning, maintenance, staffing, security and more. An online lender can have just one office and call centre to service the entire country.

So, it’s common for them to offer zero fee home loans and not charge application and closing costs. Additionally, you can expect slightly lower interest rates. However, you always want to consider the whole home loan product, and not just the interest rate and fees. You may regret going with a less suitable home loan just because it has a lower interest rate!

%%See how your interest rate stacks up%%

### Brick and mortar: Sort out your all finances in one place

Most brick and mortar lenders usually offer everyday banking services, in addition to providing loans and credit cards. In contrast, many online lenders just specialise in home loans and other credit products.

If you choose a brick and mortar lender that offers everyday banking services, you might be able to [streamline your finances](https://www.lendi.com.au/home-loans/debt-consolidation/) so that everything is ‘under one roof’. This isn’t necessary, but it may help with managing your budget if all your accounts and financial obligations are in one place.

%%How much can you save by consolidating debt?%%

## 2. Customer service

### Brick and mortar: Face to face interactions and physical branches

Brick and mortar banks, lenders and credit unions are known for their physical branch locations. Often, if a customer wants service, they will be better off visiting a branch than trying to conduct business online or over the phone. 

This means that you can carry out the mortgage application process in person. Generally, you will have to have physical copies of the necessary documents and may have to wait a while for service since they offer other services than just lending. 

Some brick and mortar lenders will allow you to at least begin the home loan application process online, but there will usually be an in-person component required.

For some borrowers, nothing will beat the experience of face to face customer service. This is often preferred by borrowers who are less technologically savvy, as they feel they can explain their concerns or questions more appropriately in person. 

With an online lender, you won’t be able to sit down with a loan officer to discuss your borrowing needs. The sense of personal connection can be seen as a great advantage for many borrowers, especially if you end up forging a good relationship with the branch’s employees. It's important to remember that forging a strong relationship will not necessarily mean better access to discounted rates or fees.

### Online lender: Better websites, apps and repayment systems

Since their domain is online, online lenders will usually dedicate more funds and time to improving the efficiency. Their websites and dedicated apps tend to be cleaner, easier to navigate and make repayments through. 

Many online lenders will also have sophisticated technology systems to help simplify and fastrack the mortgage application and settlement process. For example, the ability to upload loan supporting documentation through their online portal or the capacity to verify your identity digitally.

## 3. Application process

A major pro to using an online lender is convenience and the potential for faster processing. Since all your dealings with the lender will occur online, you can manage your home loan from wherever you are (so long as you have an internet connection or phone signal). This can help you avoid having to take an afternoon off work to go down to the bank. Plus, if you live in a remote location, you don’t have to worry about travelling to a physical bank branch to get customer service.

Several online lenders are known for processing loan applications faster than traditional banks, however this will not be the case for all. They may have smaller teams processing applications, so it isn’t guaranteed.

You won’t be able to control how quickly your home loan application is processed and approved or declined. But if speed is a priority, our Home Loan Specialists may be able to suggest certain lenders to apply with.

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## 4. Trust & reliability

Many of the brick and mortar lenders have easily recognisable names. Because of this, borrowers may have had experience with these banks before and may feel a greater sense of trust. People often don’t want to put their money with a random bank, so they go with something familiar.

This is understandable but probably shouldn’t be your deciding factor. Despite many online lenders receiving backing from the larger, more traditional ones, some borrowers may still deem them as less trustworthy. However, this perception of unreliability is largely unfounded. In fact, over the past year, Lendi has seen an [increasing number of borrowers](https://www.lendi.com.au/inspire/insights/home-loan-report-jan-jun-2020/) embracing the online home loan process.

Take the time to research the lenders you are interested in and remember you can refinance if you end up unsatisfied with your home loan or lender.

## Should I choose an online or brick and mortar lender?

What you choose is completely up to your needs and preferences. See our summary table for a brief comparison of online vs brick and mortar lenders:

| Online lender     | Brick and mortar lender     |
| ---------- | ---------- |
| All communication is online or via telephone       | Access to physical branches       |
| Application happens online       | In-person communication       |
| Typically online lenders are newer and less established       | More personal customer service experience       |
| May offer reduced interest rates and low fee home loans       | If applying directly to the bank, application will usually be at least partially in person       |
| Processing times may be faster       | Traditional, recognisable banks       |
| Often offer specialty home loans (e.g. bad credit loans)       | Usually offer everyday banking services and various loan types       |
| Usually have good websites and online services       | Less likely to consider lending to borrowers who only have foreign incomes       |

If you use Lendi’s online platform, you can compare and apply for home loans exclusively online. We work with [over 35 Aussie lenders](https://www.lendi.com.au/home-loans/lenders/), including traditional brick and mortar banks, as well as some emerging online lenders. 

## Got a home loan question? Just ask!
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a [Home Loan Specialist here](https://www.lendi.com.au/book-appointment/)

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*