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4 ways technology is changing the mortgage industry

We are in the middle of a digital revolution that is radically changing the way we live. We want faster, seamless digital experiences, personalized products, and greater flexibility.

We are in the middle of a digital revolution that is radically changing the way we live. Food delivery, ordering a taxi, booking a holiday to the way we bank...the digital transformation taking place is not only changing how we live but changing our expectations along the way. We want faster, seamless digital experiences, personalized products, and greater flexibility.

Nowhere is this more apparent than in the mortgage industry. According to industry surveys, 80% of potential borrowers would prefer an entirely online mortgage loan application process. While the majority of the industry lags behind, there are some key digital players who are disrupting the industry to provide a better overall customer experience for home buyers.

What’s driving digital change?

The biggest challenges that are driving the adoption of digital mortgages are:

Lack of transparency

With so many stakeholders involved in the mortgage process, it’s difficult for the real estate industry to give home buyers the transparency and visibility they crave. Banks, mortgage brokers, and real estate agents are all involved at some stage, increasing the complexity of the process, which translates into a loss of visibility for borrowers.

High operational costs

Mortgage costs are one of the biggest challenges to the existing mortgage process. Additional upfront fees when buying property in the UAE can add up to 7% of the property value. Real estate agency and mortgage broker fees alone can add up to 2.5% of the property value given the labour and hours involved in the traditional process.

While in banks, the process of underwriting can be internally inefficient and requires the involvement of 5 teams (sales, credit, operations, product, PRO). This fragmentation results in a much longer turnaround and higher overhead costs.

Long processing times

The traditional mortgage process can take several months to complete from start to finish. The mortgage application alone, with all the documents that are required and the verification steps from different sources, all being done manually, can significantly slow the process down. Add to that the legal work that is exchanged between multiple parties and sellers and buyers, which means there is lots of room for improvement.

Poor customer experience

Why can’t applying for a mortgage be simpler? Easier? Less stressful than it currently is? A long, disjointed, frustrating mortgage process has left a lot to be desired from the perspective of the consumer. Today’s consumers are extremely sophisticated, have unlimited access to information, and demand more from businesses, including lower prices, more convenience, and greater speed - all qualities lacking in the mortgage industry.

How technology has overcome these challenges

Digital technology promises to eliminate many of the challenges mentioned above. Prop-tech companies such as Better in the US, or Trussle and Habito in the UK, are already leading the way globally by solving the mortgage challenges of consumers and creating an entirely digital experience that’s easier, faster, and more enjoyable.

Some of the best ways that tech is enabling companies to create value for customers are:

Seamless, online experience

Digital technology and online tools allow companies to create a smooth, hassle-free loan application experience. Uploading documents to a single online portal speeds up the application process; online chat or WhatsApp options allows for a mobile-first approach; intuitive designs that improve the user experience; auto-fill forms so users don’t have to fill in a section for which they have already provided data.

While data shows that home buyers still want human interaction and support throughout the mortgage process, an expectation for convenient, digitally-led features will only become more vital for younger generations looking to get on the property ladder.

Faster, personalized mortgage offers

Finding the best mortgage deal for you is one of the most intimidating parts of the traditional process. You can end up searching for days without getting any closer to see if the mortgage products you’ve shortlisted are the best ones for your specific circumstances.

Yet for digital-first mortgage companies, manual searches are becoming a thing of the past. By leveraging computer-based algorithms, mortgage companies can cut the search time from days to a matter of seconds. And where searching manually may only cover a fraction of the total number of mortgage products, technology allows you to cover a much broader range of products. Huspy, for example, lets you search over 500 mortgage options in seconds to find the best deal for you.

Finally, by entering a few details, these companies can also make sure to filter for the mortgage options that are suitable for your specific needs.

Increased transparency and visibility

As already discussed, each mortgage transaction involves multiple stakeholders - banks, real estate agents, mortgage brokers, credit rating agencies, and regulatory agencies. All of which makes it difficult to provide full visibility.

Yet modern digital platforms allow users to keep track of their application progress in one place. These unified platforms are transforming the way brokers, agents, banks, and homebuyers all communicate with each other and allow the home buyer to keep updated on the various stages of the application - from mortgage application to legal work, to final transfer of deeds, consumers can now stay informed from start to finish.

Lower costs for the consumer

One of the great benefits of digital technology is allowing online mortgage companies to reduce unnecessary operating costs. For example, many online mortgage brokers don’t charge any upfront fees and get their commission from lenders instead. This means they can operate independently and solely in the interest of the customer.

Looking ahead

While still lagging behind other digital disruptors such as Netflix, Airbnb, Uber, and Amazon, online mortgage experiences are expected to become the norm for future generations who are demanding seamless, transparent and, stress-free digital experiences. The mortgage companies that can change with the increased expectations of the consumer will be the most successful ones.

Huspy is the first entirely online mortgage broker in the UAE. We believe that customers are massively underserved when looking to buy a home, and want to replace an outdated system with modern, digital technology to give people better rates, 3x faster financing, and a better overall mortgage experience. Find the best mortgage offer tailored to your needs by giving our mortgage calculator a go.

Written by Huspy Team

Published on 3 May 2023

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