What are Internet mortgages really?
Apart from standard type mortgages, there are now Internet mortgages. How are those different from the traditional mortgage type? Since you can buy almost anything on the Internet these days, are there actual Internet mortgages, these days?
The idea of Internet mortgages is fairly new. But, one might say, who would Internet mortgages not be available, just like almost everything else that one can buy on the Internet, these days.
Who wants an Internet mortgage? It is technically possible to arrange mortgage financing over the Internet without even talking to a person. If you’re absolute certain that you don’t need any person-to-person mortgage advice, then it would be a possibility to forego all personal contact and just apply on-line.
Very often, however, when you apply on-line, they also ask for your phone number. This could very well mean that you should expect the bank’s call. Most financial institutions use the Internet just as a dragnet. They really want to talk to you which might be very hard to avoid altogether.
In that sense, what’ left of Internet mortgages, is merely an marketing system. Nothing wrong with that – but you might be getting more person-to-person mortgage advice than you had thought.
Marketing Internet mortgages sounds like it makes a lot of sense – however the odds are that you’ll end up at a call centre of some kind. Nothing wrong with that, but it’s not really an Internet mortgage any longer.
INTERNET MORTGAGES DEBUNKED
It’s also not such a long time ago that you’d have to make an appointment and visit a bank to make a mortgage application. Things have changed quite a bit from those days. Many banks (in some form) like to come to you and dispatch mortgage specialists right to your home or to a coffee shop near you.
Most mortgage applications now come from “sources other than in-branch”: mortgage brokers, mortgage sales representatives, Internet and private lenders. The two groups that are really battling each other for market share are the mortgage brokers and mortgage sales representatives.
These days, virtually all banks have mortgage sales specialists who would normally travel to YOU to make arrangements for the mortgage application process. Mortgage specialists have multiplied spectacularly, having grown from hardly any market share in just a 15-year period. Broker share has been around a little longer and is showing fair stability. Over the past years, banks have built up their mortgage sales force tremendously.
Banks like their own sales people the best because they only sell the mortgage product offered by that particular bank. Also, this approach will afford the possibility of cross-selling other bank products to their mortgage clients (like: credit cards, RRSPs, chequing accounts, etc.). Cross-selling is much more difficult (almost impossible, really) through independent brokers.
The world wide web is a primary source of marketing for Internet mortgages, these days. It’s not likely that rates will be any better through the Internet. It’ll all quickly fall back to standard negotiations.
TO MARKET INTERNET MORTGAGES
The independent broker is also a common source for borrowers when a mortgage needs to be renewed (term is up). However, banking is quite traditional. We might have pin-and-chip credit cards, finally. We also still have those really old-fashioned paper cheques. It goes to say that some things change very slowly in the banking industry.
Ordering a mortgage loan over the Internet usually means that a mortgage specialist will make contact with you over the telephone because it really is a complicated process. When applying for a mortgage on one of the major banks’ websites, it’s remarkable that a quick telephone call will be placed to you in a very short while. It takes you out of the realm of the Internet. You enter the conventional processing capacities of the person-to-person world.
Actual Internet mortgages without person-to-person contact are almost impossible, as of yet. Banks are conservative! One bank that works mostly through the Internet is Tangerine Bank (and their personal contact eventually also runs through a call centre). In all, non-person-to-person-processed mortgage loans take on less than one percent of the Canadian residential mortgage market.
It’s safe to say that you’d be in a more beneficial position when negotiating a mortgage loan, when you know a bit more about it. At the bottom of this blog article are some further reading suggestions. However, never forget that these blog pages do not constitute mortgage advice; they are merely a forum for discussion.
Is the banking industry going to change dramatically? We don’t think so. Typically, changes in the financial world come slowly and gradually. That would possibly apply to Internet mortgages as well.
MORE blog articles available here.
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