What Are Fintech Lenders and Should You Consider One?

If you’re thinking of applying for a mortgage any time soon, you really don’t have to go any further than your computer, tablet, or even your smartphone to get one. These days, applying for a home loan can be done completely online via digital devices, completely changing the lending sphere from just a few years earlier.

Known as ‘fintech lenders’, online lenders are making the mortgage application and approval process a lot faster and more convenient for buyers who are looking to make homeownership a reality for them. The question is, should you go the fintech route or stick with a traditional lender?

What is ‘Fintech’?

Fintech, a combination of the term ‘financial technology’, refers to a phenomenon in which both consumers and businesses can access financial services through digital devices. It was developed to help consumers and businesses better manage their finances and automate these services.

Nowadays, people can do all their banking and wealth management through their smartphones and tablets without the need to visit a brick and mortar lending institution in person thanks to fintech. This technology has expanded over the years to increasingly serve consumers and has incorporated all of the typical day-to-day services that consumers require, including having access to bank accounts and even applying for mortgages.

Should You Consider Applying For a Mortgage With a Fintech Lender?

There are plenty of perks of applying for a mortgage with a fintech lender. But there may also be a few drawbacks as well. Let’s go over these pros and cons to help you decide if this tactic is right for you.


Convenience. There’s no denying the convenience of being able to apply for a mortgage from the comfort of your home without the need to venture out and meet with a lender face-to-face. Simply log on to your computer or mobile device and go through the process laid out with the lending platform.

Possible lower rates and fees. Since online lenders typically have less overhead compared to brick-and-mortar banks, they may be able to pass their savings on to consumers by offering lower interest rates and fees. Even a fraction of a percent cut off an interest rate can translate into thousands of dollars in savings over the life of the mortgage.

Approval may be easier. Many fintech lenders may work with borrowers who have credit scores that are not high enough to secure a mortgage with traditional lenders. Conventional loans have minimum credit score requirements for mortgage approval. If you have a credit score that is not as high as the minimum required for a conventional mortgage, an online lender might be more open to supplying you with a home loan.

Applying may be faster. The mortgage application process is typically a cumbersome one filled with tons of paperwork to have to gather and supply to the lender. Getting all your documents together can take a long time, especially if you have to access forms from the bank or IRS that you may not have readily available. Instead, online lenders typically make the process more streamlined by allowing borrowers to upload all paperwork directly to their sites.


Rates may change. Although online lenders may be able to charge less in rates and fees, they may not always guarantee advertised rates. Some lenders may advertise lower rates than competitors in an effort to attract new customers, but these rates can change once the lender has had a chance to go over the documentation supplied and check out credit scores. Further, rates tend to be much higher for borrowers with low credit scores, even though approval for a mortgage with bad credit may be easier with online lenders compared to traditional lenders.

Lending scams exist. There are plenty of legitimate online lenders that offer sound mortgage services you can trust. But there are also some lenders in the fintech sphere that may be predatory. Usually, these lenders target consumers with bad credit who are unable to secure a mortgage the traditional way. As such, it’s important to be vigilant when choosing an online lender when applying for a mortgage. As a general rule of thumb, keep your guard up against lenders who guarantee or promise mortgage approval.

Customer service may be lacking. While online lending may offer convenience, there’s no substitution for the personalized service and face-to-face contact that you get with a traditional lender. You’ll be able to contact them (within business hours) whenever the need arises. Such is not always the case with an online lender, making it more challenging to get in touch with a real live person when you need some help.

The Bottom Line

The fintech lending platform has certainly transformed the way people do their banking and even how they apply for and obtain a mortgage for a home purchase. There are certainly a number of benefits of applying for a home loan via the internet, but there are also some disadvantages that are worth noting. If you choose to go the fintech route, be sure to consider the points made, and be on the lookout for lenders that may not necessarily have your best interests in mind.