Robo-adviser MortgageGym will launch an online tool that provides consumers with a guarantee they will be able to afford the mortgage they are advised to take.
The technology, set to launch on the firm's website in the next few months, will combine open banking, credit file searches and lending criteria to narrow down affordable and eligible policies for the customer.
It stated while a traditional mortgage application would use three months' worth of paper documents to establish whether the applicant could afford the policy, MortgageGym will only use a year’s worth of open banking data, a credit check and mortgage criteria from the lenders on the site’s panel to guarantee affordability.
The open banking element, which will analyse the applicants’ spending patterns, will differentiate between salaries and other income and split spending into necessary, non-necessary and lifestyle expenditure.
Current lenders on the panel include Barclays, Coventry Building Society, Accord Mortgages, Platform Mortgages, Leeds Building Society, The Family Building Society, Aldermore, The West Bromwich, Clydesdale Bank, Skipton Building Society, Natwest and TSB, and the firm is currently in talks with eight other lenders.
According to MortgageGym, the new tool will raise applicants' eligibility – how likely they are to be approved for a mortgage – from 75 per cent to 95 per cent once all lenders are involved.
MortgageGym is a regulated robo-adviser but customers who use the site also have access to the firm’s 20 mortgage advisers throughout the process.
John Ingram, co-founder of MortgageGym, said: "We are essentially pioneering the use of open banking data in the mortgage sector in a highly practical way.
"We are the only digital mortgage platform that has bank-by-bank eligibility, credit score insights and open banking, which will be the most effective way of assessing mortgage eligibility and affordability in the UK and revolutionise the mortgage sector."
Mr Ingram said the platform would mean consumers would not have to explain to their mortgage broker their spending habits.
He added: "As we all need to be assessed when applying for a mortgage, as it’s a regulatory requirement, who wouldn’t want to forgo the annoying explanations and antiquated form-filling? There will soon be a faster, painless and more accurate way of getting the best possible mortgage deal for you."
Kevin Dunn, senior partner at Furnley House, said: "I believe any innovation is good. However, this is in its infancy as only 12 lenders are on the platform so a broker or consumer will have to look elsewhere to ensure they are covering the whole of market and it might take some time to make any real breakthrough.
"It’s a system that automatically reduces lenders based on the user inputting everything correctly, which can be dangerous.
"It also means the client must fill in forms themselves which can be annoying as normally our mortgage advisers would do that for the clients."
Ian McKenna, director of the Financial Technology Research Centre, said: "Open banking can transform the mortgage process enabling consumers to receive accurate assessments of their application far more quickly than has ever been possible.
"We are seeing a range of new services which will be able to support this. This brings both challenges and opportunities to advisers. Those who embrace the new technologies will be able to deliver faster, streamlined and more reliable service to their clients.
"That said, it will put more pressure on firms who operate using traditional means. Lenders and advisers who fail to adopt technology will find it increasingly difficult to compete."
imogen.tew@ft.com
