What do conventional mortgages offer compared to Fintech mortgages?

31 January, 2024 | M Aparicio

Perhaps you still don’t know what Fintech Mortgages are and continue to think that the only possible mortgages are those that banks have always offered. Don’t worry, most people don’t know about them, but by reading our Hipotecas Plus article, you will already be in the group of those who know what they consist of.

What are Fintech mortgages?

Fintech Mortgages are mortgage loans (that doesn’t change) but offered by technofinancial companies, as an alternative to traditional banking.

The term Fintech is formed from ‘financial services’ and ‘technology’, and is nothing other than the financial sector and technology forming a tandem to provide customers with innovation, better service, speed, efficiency, and greater accessibility.

Però les hipoteques convencionals seguiran, és clar, estant presents i en aquest article anem a veure què ofereixen les hipoteques convencionals enfront de les hipoteques Fintech.

We know that the acquisition of a home is an important moment in a person’s life. If we find ourselves in that process, we must keep in mind that choosing the right mortgage is crucial. Therefore, it’s better to consider both traditional mortgages and Fintech mortgages.

Two types of mortgage

Right now, in the current market, we are faced with two main options:

• Conventional mortgages.

• Fintech mortgages.

Ambdues tenen les seves pròpies característiques i avantatges. Vegem, el que ofereixen aquestes dues alternatives. Des de Hipoteques Plus volem ajudar-te a esbrinar quina pot ser per a tu la millor opció segons la teva situació financera i les teves circumstàncies personals.

Conventional Mortgages: The Traditional Process

Les hipoteques convencionals són aquelles que provenen d’institucions financeres tradicionals, com bancs i entitats financeres. Aquestes hipoteques han estat l’estàndard durant dècades i ofereixen certes avantatges, i han vingut sent sempre eficaces, per la qual cosa haurem de seguir tenint-les en compte.

Ara veurem les avantatges de les hipoteques tradicionals enfront de les hipoteques Fintech.

Advantages of Traditional Mortgages Over Fintech Mortgages

Long experience, extensive customer base, and social recognition. Traditional mortgages have a long history. We cannot doubt the recognition and experience of traditional banking.

The financial institutions and well-established banks that we all know have a long history and extensive experience, as well as a wide customer base. The experience and recognition is undoubtedly a clear advantage, which gives us security when taking such an important step as taking out a mortgage.

Enhanced Security

Traditional, well-established banks are subject to, monitored, and regulated by government agencies and are bound by rigorous and strict laws and regulations. This is another point in favor of traditional banking, as it translates into increased security for customers.

Closer and More Personalized Service

Extreme digitalization may be seen by many citizens as something too cold and distant, especially at times when problems, uncertainties, or difficulties arise.

Knowing that we always have the possibility of going to a bank branch where they can attend to us and directly resolve our doubts or concerns in a personal and direct manner, is another key factor in favor of traditional banking.

Fintech Mortgages versus Traditional Mortgages

Innovation.

Fintech mortgages have their strong point in the innovative approach and the great speed with which the entire mortgage process can be carried out and completed.

They adapt to the real estate market dynamically.

We must keep in mind that Fintech Mortgages rely on clearly efficient, fast digital processes, and very advanced algorithms.

This can be advantageous for the client given that the real estate market is very dynamic, and thanks to this speed, we can avoid missing an opportunity.

However, this can also be seen from the opposite side. Perhaps, if the process had been longer, we might have found a more advantageous mortgage that emerged later, after our mortgage process was already closed.

Lower credit requirements and support in advanced digital processes

Fintech mortgages can be less demanding, or if you will, more lenient in terms of credit requirements. They also tend to require fewer linked products to ultimately grant the mortgage.

Fintech mortgages, by relying on advanced digital processes, can gather a wide variety of information and can ultimately adapt to a wide range of financial profiles.

We can say that Fintech mortgages, in addition to streamlining the mortgage process, evaluate the client’s financial health in a broader way by taking into account many more factors, and this can ultimately benefit the client by having the mortgage granted.

Greater flexibility in loan terms

Fintech mortgages often offer greater flexibility in loan conditions than traditional mortgages. This can be a significant advantage for many citizens, especially for those seeking customized options for their specific needs.

In summary, we can say that traditional mortgages involve stricter requirements, a longer process, a potentially higher interest rate, longer waiting times, and more bureaucracy than Fintech mortgages. Traditional mortgages offer greater security, a more direct and personalized approach, and bring their recognition, experience, and proven financial stability.

The client must make their decision

Choosing between a conventional mortgage and a Fintech one will depend on your individual needs and preferences. Both options have advantages and disadvantages.

Research and compare specific offers, considering factors such as interest rates, terms, credit requirements, and the customer service provided.

We hope to have been helpful in providing a broad overview of the advantages and disadvantages of both types of mortgages.