The digital mortgage shift

by AB20 Jun 2018

Brokers and lenders are in a unique position to transform – and capitalise on – the post approval process. Edward Kerr, business development manager, Lextech, explains 

Speedy loan approvals are the end game for mortgage brokers. The stressful process of satisfying requests for information and getting credit approval in a competitive market leads to deals that at times may take months. One problem for brokers is that borrowers typically see loan approval as their golden ticket, with little guidance as to why mortgage settlement can take as long as it sometimes does.

Recently, we have seen an emergence of digital loan approval technologies that automated the clunky, paper-based application and approval process. But why stop there? It is the stages after loan approval that tend to drag on for weeks, if not months. For this reason, leveraging digital technologies throughout the post-approval process must be a key priority for mortgage brokers and the lenders they refer business to.

Whether the settlement function is outsourced by a lender or provided in-house, streamlined and robust technology systems are the key to enabling a transparent, collaborative settlement process with faster turnaround times. Brokers, as introducers of new loans, have an opportunity to work with their respective lenders to ensure digital solutions are being considered, or have been put in place, in order to further automate the post-approval mortgage process.

Let’s take a step back and consider the relationship that a broker has with their client: this is based on the significant amount of trust the borrower places in the broker to assist with what is typically a milestone event in their life. For this reason, real-time updates and open communication channels are paramount to enable a broker to provide their client with a first-class service. Brokers must recognise the power they hold in a transaction and break the age-old tradition of a file going down a rabbit hole once a solicitor or mortgage processer has been in instructed. As a broker is seen as the face of the loan, providing settlement status updates in a timely fashion will ensure the reputation of both the lender and broker are upheld.

Brokers must recognise the power they hold in a transaction and break the age-old tradition of a file going down a rabbit hole once a solicitor ... has been instructed

The digital technology being used to monitor documents, milestones, correspondence and settlement bookings or advice must be at the forefront of the minds of both lender and broker. It is crucial in today’s digital economy that parties can correspond using Software as a Service platforms or smartphone applications, to ensure there is no misinformation and no documents are lost along the way.

The use of web-based applications and milestone reporting by lenders is what assists brokers in delivering the updates their clients need. Updates should take the form of automated SMS correspondence or automated emails generated in real time to avoid excessive time delays or last-minute settlement reminders.

As millennials look towards entering the property market, they expect to transact their mortgages in the same way they pay for coffee – completely digitally.

Technologies like Apple Pay and Android Pay, as well as the New Payments Platform, all help us achieve faster payment solutions to create a more versatile digital economy for settlements. On the documentation side, we have seen innovators like DocuSign and ZipID introduce ways to automate the mortgage process and remove the need for multiple face-to-face meetings. It is these companies and their competitors that brokers must closely analyse to ensure they can deliver the most digitally savvy service to their clients. For this reason, brokers must constantly work towards using technology in collaboration with their lenders.

Edward Kerr
Business development manager