Mortgage Choice and 86 400 partner up, offering completely digital home loans

author-avatar By on November 03, 2020
Mortgage Choice and 86 400 partner up, offering completely digital home loans

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86 400 has partnered up with Mortgage Choice to give more brokers and customers access to its digital home loans.

The neobank sided with Mortgage Choice in order to offer a "seamless, digital home loan solution, featuring fast turnaround times with unconditional approval in as little as two hours". 

There were already 12 partners and aggregators working with 86 400, meaning more than half of all brokers in the country now have access to its home loans. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Mortgage Choice General Manager, Product and Corporate Communications, Emma Dupont-Brown said 86 400's digital home loan process eliminates a significant amount of paperwork, which has long been a broker pain point. 

"The bank offers a compelling proposition, being the first of the newly licensed digital banks with home loan and banking solutions, which means Mortgage Choice brokers will now be able to offer a completely digital home loan solution to their customers," Ms Dupont-Brown said. 

“The world of banking and home loans has changed and Fintechs like 86 400 are making a seamless home loan process more accessible.

"Australian consumers are savvy and expect to be able to do more online, (and) this extends to their banking and home loan."

86 400 first launched its fully-digital home loans in November 2019, claiming the process would be six times faster than the average big four bank application time. 

Since then it has introduced tiered variable rates for customers, with lower interest rates for those with more equity in the property(generally available for those with a deposit of 20% or greater). 

For owner-occupiers:

  • 2.49% p.a (2.78% p.a comp rate*) for principal and interest (P&I), variable customers (60% LVR or less);
  • 2.29% p.a (2.73% p.a comp rate*) for three-year fixed P&I customers; 
  • 2.99% p.a (2.93% p.a comp rate) for interest-only (IO), variable customers (60% LVR or less)

For investors: 

  • 2.69% p.a (2.97% p.a comp rate*) for principal and interest (P&I), variable customers (60% LVR or less);
  • 2.49% p.a (2.92% p.a comp rate*) for three-year fixed P&I customers; 
  • 3.09% p.a (3.09% p.a comp rate) for interest-only (IO), variable customers (60% LVR or less)

According to 86 400 National Manager, Broker Distribution, George Srbinovski, this partnership allows 86 400 to turn the traditional home loan application on its head and "continue to challenge the status quo" in the home loan market.

"Being a digital bank means we aren’t encumbered by legacy systems and processes, which means we can offer our customers the best possible rates. 86 400’s digital home loans solution offers customers access to a competitive interest rate, next to no paperwork and a faster approval time than the big four banks," Mr Srbinovski told Savings.com.au.

"By shaking up traditional processes and using smart technology to create solutions for long-standing customer pain points, 86 400 loans give customers a clear, accurate and immediate view of their financial situation before committing to a mortgage."

Mr Srbinovski also noted that 86 400 is still the only neobank to offer home loans to customers.

"For new banking entrants to be sustainable, they need to balance their deposits with their lending," he said.

"86 400 has a long-term, sustainable business model which balances both sides of the ledger, and are continuing to roll out products and partnerships we know our customers want."

As at September 2020, 86 400 had a combined $62 million between residential and investment housing loans on its books. 

This makes it one of the smallest registered ADIs in terms of home lending, but as 86 400 told Savings.com.au back in July, it has some ambitious growth targets. 


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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