Who Wants Your Home Loan?

These new websites allow you to auction off your mortgage to the lowest bidder, which could save you thousands over the life of your loan.

As well as shopping around for the lowest prices, you can save as you spend by buying in bulk. Buying in bulk reduces the overheads of manufacturers and retailers, allowing them to benefit from economies of scale, which, in turn, means lower prices for you.One company has applied this principle to mortgages, allowing borrowers to club together to win lower interest rates from lenders. Mortgage auction website mortgagebundles.com makes borrowers more attractive to lenders by bundling together those with similar profiles.The idea is that groups of, say, fifty borrowers, will have greater appeal to lenders than single applicants do. Hence, these groups can use the power of collective bargaining to pit mortgage lenders against each other in a real-time auction, eventually awarding their business to the lowest bidder (the one with the lowest interest rates). mortgagebundles.com groups borrowers based on the type of loan they want, how much they want to borrow, their credit rating, and so on.At first glance, this sounds like another great way that we can harness the power of the Internet to cut costs, improve efficiency and win better deals. After all, it makes perfect that fifty borrowers working together can win a better deal than they could individually. However, it's early days yet: so far, only fourteen mortgage lenders have signed up to mortgagebundles.com. Then again, Nationwide BS, the UK's biggest building society, is one of these early adopters, which is a vote of confidence in the service.Currently, there are over 150 mortgage lenders actively competing for business in the UK, so fewer than one in ten have signed up to this auction service. However, it will no doubt catch on when lenders realise that it provides them with lower acquisition costs, easier administration and higher demand. Indeed, a rival auction service is due to arrive later this year, from established website ukmortgagesonline.com.For the time being, I would view this service as a useful addition to the tools already used by brainy borrowers, such as comparing deals using one of the many online search engines. Also, using a no-fee mortgage broker, such as the award-winning London & Country Mortgages (a Fool Partner) gives you access to more than 8,500 home loans, with someone else doing all of the hard work for you!More: Check out the handsome home loans in our Mortgage centre | Ten Ways To Be A Smarter Homeowner!