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An online mortgage broker can save you thousands by searching the market for the best mortgage deal for your specific circumstances.

Online mortgage brokers are on the rise promising faster, simpler and less stressful services, but are they as good as the human approach.

Once upon a time, using a mortgage broker was a long and complicated business. You’d have to sit down with an adviser, go through meeting after meeting and wade through reams of paperwork. It was long, complicated and frustrating. Small wonder they say moving house is one of the most stressful experiences you can have.

Customers are crying out for something easier and riding to the rescue comes the internet and a new breed of online mortgage broker. Their promise is simple – to make everything quicker, easier and more affordable.

However, there are pros and cons to using this service. Yes, it’s quick, yes it cuts down on paperwork and yes it is often less expensive. However, many will still enjoy the personalised and more detailed service they can expect from a traditional broker.

How do online mortgages work?

Online brokers have grown rapidly over the past few years, as people become increasingly comfortable using the web for all sorts of financial services. However, they have some way to go. According to a survey from Which, online brokers still accounted for a minority. Two of the leading online providers Habito and Trussle, attracted 3% of customers each while 2% used Mortgage Gym.

Traditional brokers have a clear advantage. This is, after all, one of the most important financial decisions most of us will ever make. It pays to get things right and most people are prepared to invest a little more time and effort into the decision.

However, the balance is changing. Technology is improving, people are becoming more comfortable with the concept and online providers are adding more features which enable them to offer much better and more personal advice.

The basic principle is the same as mortgage brokers. They serve as middlemen researching the market and finding deals which are suitable for you. They save time and argue that they can also save money by negotiating a better price with the provider.

How much do online mortgage providers cost?

Advice is often provided free of charge although some charge a small fee. Those which are free will generally make their money by charging a commission to lenders once you have decided to go ahead with a mortgage. Even those who do charge a fee will normally point out that they are much less expensive than their human counterparts.

This is the first big advantage they offer: affordability. They can offer services cheaper because they lack the overheads of staff, premises and other infrastructure which can drive up the costs. By automating many processes, such as searching for mortgages, they also drive down time and costs, with some claiming to get you a mortgage within 15 minutes.

The downside of online mortgage brokers

However, one possible downside is that they might not be as thorough. One of the reasons more people prefer the old-fashioned approach is that it is more thorough. A mortgage adviser will sit down with you in person and painstakingly go through your incomings and outgoings to advise you on what mortgage you can reasonably afford. This ensures you find the best deal for your situation.

A robo adviser is quicker, but it might not be able to offer the detailed, nuanced, advice of a human going through your financials with you in person. It will look at your incomings and outgoings, but the chances are its advice is not going to be as closely tailored.

To guard against the risk of over borrowing, some online mortgage brokers have partnered with credit ratings agencies. Mortgage Gym, for example, works with Experian and can run soft credit checks to assess eligibility.

Brokers are also beginning to take advantage of open banking rules which allow you to require your bank to share information with other providers. This will make it easier for them to get information about your financial situation and provide better and more tailored advice.

Many will also have human brokers on hand to offer advice. For example, you can enter your details and have the system present you with several possible options. However, a human mortgage adviser can contact you directly to offer more personalised advice.

Providing an alternative to traditional mortgage advisors

The next major appeal is that they can be more flexible. Many of these new providers are fintech start-ups and make much of their desire to make life easier for customers.

For example, Habito makes a great deal about the personal journey of its founder Dan Hegarty who had a nightmarish experience trying to buy his first home. That, he said, prompted him to develop a service, using the internet which would make life easier, more affordable and less stressful.

This, as with many other services, includes offering options for people who might otherwise struggle to secure a mortgage such as freelancers or those with credit histories. For them it’s all about offering people who had been neglected by the insurance industry an alternative approach and making mortgages less intimidating and complicated.

This faster, more affordable and more flexible service may not appeal to everyone. Many will prefer the advantages and personalisation which come with a traditional mortgage broker. The online approach lessens the opportunity for human judgement and support which can mean advice is less tailored to you.

This will be particularly keenly felt in the early stages where a mortgage provider can offer more comprehensive advice on options you need to put yourself in a position to qualify for a mortgage.

Some online providers are trying to plug this gap with options such as a mortgage calculator. By inputting your details, this can give you a selection of products which it thinks you will be suitable for. However, this list will be generic. The chances are a human adviser who has been able to work closely with you will be able to offer something more personalised.

Is an online mortgage broker for me?

There are pros and cons to using an online mortgage broker. Some will relish the speed and simplicity these bring to the process. It’s cheaper and less intimidating than sitting down with a mortgage adviser. Many people will dislike the thought of a human going through their personal finances directly in front of them.

For those whose financial situation is straightforward, robo mortgage advisers may prove to be the fastest and simplest option. They can give you swift access to a selection of providers with a process which is much faster and easier than the alternative.

For people whose situation is more complicated or are willing to invest the time and effort required to source the perfect mortgage option, however, traditional mortgage advisers will still be preferable.

Others, though, might use a blend of the two. An online mortgage broker is a great way to dip your toe in the water. Most are free unless you actually take out a mortgage and can provide you with a lot of information on which to start your journey.

They can give you an idea of the mortgages you might be suitable for, while a personal adviser, could take this advice and build on it, helping you to secure a better and more affordable deal.

The decision, as with everything else, will come down to you and what you’re looking to get from this whole experience. One thing’s for sure. As technology improves and the marketplace becomes more competitive, online mortgage brokers offer an increasingly appealing prospect