Previously known as Benevolence Financial Group, Open Home Loans is launching to offer hope to borrowers on the mortgage cliff and put homeowners in control of their finances
Melbourne, Australia, 23 August 2023 — A new digital mortgage broker is shaking up the way the mortgage industry operates, offering relief to borrowers anxious about the fixed-rate mortgage cliff. Open Home Loans — formerly known as Benevolence Financial Group (BFGLoans) — will offer the fastest refinance application in Australia, slashing the digital application process to just seven minutes.
Samuel Philipos, Founder of Open, says the platform, which relies on Open Banking technology, will ensure that homeowners stay on a home loan that best suits their needs and priorities, now and forever.
“Open will introduce automatic rate shopping, bank negotiations, and notifications so homeowners never again need to worry about whether they have the best home loan for them. They won’t have to spend hours shopping around on comparison sites or rehearsing a script to ask their lender for a rate discount.”
Generally, it becomes worthwhile to refinance when borrowers can make at least $2,000 of annual savings on their mortgage after switching costs.
The system offers access to more than 35 lenders and notifies the homeowner whenever a refinance deal allows them to make their nominated annual savings on their mortgage. Through Open a borrower can elect to be notified when they hit that sweet spot. The system can then be set to check the market every three, six, nine, or 12 months until it locates a deal that delivers the nominated savings without impacting credit scores.
When one is identified, Open will ask the borrower’s existing lender to match the deal. If not, the borrower has the option to refinance knowing they will be better off.
“Homeowners often ‘set and forget’ their home loan because they think it’s too difficult to switch or they don’t know when they are paying too much,” says Philipos. “That inaction can cost them thousands of dollars over the life of their loan, and it means they could be taking longer than necessary to pay off their loan. So it’s costing them time and money.
“We know that people often shop around to find a better home loan but a much smaller proportion take action and make a switch.”
One of the barriers to refinancing can be comparing the different features, cashback offers, or incentives such as travel points associated with mortgages. Borrowers also have to weigh up the cost of switching which can include mortgage discharge fees, break fees, and establishment fees.
Open will consider all of those aspects and predict negotiated rates from the big four banks that borrowers may not be aware of if they are shopping around on comparison sites.
“Through Open the process of shopping for a refinance becomes simple, fast, and effective and that reduces the time, effort and cost of moving from one product to another.”
The digital broker could offer a timely reprieve for borrowers on fixed rate mortgages who are facing a jump in their monthly mortgage repayments as those fixed rate terms expire.
Philipos says it also has the potential to deliver immediate savings for borrowers who may not have reviewed their mortgage for several years.
The Australian Competition and Consumer Commission home loan inquiry in 2020 found that rates offered to new customers are about 0.58 percentage points lower on average than those charged to customers who have held a mortgage for three to five years. That differential can stretch to more than 1 percentage point on average if a borrower has not reviewed their home loan for 10 years.
The digital mortgage broker is also appealing to borrowers by offering more transparency than the traditional mortgage broker and more choice than their existing lender.
“When a borrower approaches their bank to get a better deal they are limited to the lender’s products rather than having access to the broader mortgage market.
“If they go to see a traditional mortgage broker the best interests duty legislation requires the broker to find the best deal for the customer rather than recommending a loan that will pay the most commission.”
“But a day after a mortgage is transacted there is no obligation on the broker to tell the customer if there is a better deal available.”
Philipos says traditional mortgage brokers can be reluctant to help a customer to refinance within two years of taking out a mortgage because of the additional processing costs for the broker. Open does away with those limits by streamlining the work to cut these expenses. Because of Open’s tech and how it’s organized, they bring down the overhead costs. if a borrower is better off by refinancing within two years of taking out a mortgage it will notify them.
“We know how significant a mortgage can be on someone’s life, especially in this current environment. Having the right fit loan on an ongoing basis is beyond the thousands in savings. Rather it’s what people can do with the money – to help their own families and others around them. And we’re thrilled to be uniquely positioned in helping them achieve that. In just minutes, someone could radically reduce their mortgage repayments and, more importantly, never need to worry about their biggest debt.
Australian homeowners can use Open to see what refinancing options they have available to them for free and within seven minutes today.
