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Digital bank 86 400 launches fast digital mortgages with help from brokers


86 400's app in action.

"The fact that we're getting data up front electronically cuts down the process substantially."

86 400 only launched its first banking products in September and now it's also offering digital home loans.

The new digital bank's loans are available through mortgage brokers, facilitated through 86 400's own platform. The result, according to the new lender, is a streamlined and seamless application process.

"We're aiming to do it six times faster than the average of the Big Four," said 86 400 CEO Robert Bell.

"We have the ability to sign all documents - except one, which is legally required - everything else can be signed digitally. Having captured all that information means that we can get a really accurate application and we can assess the loan substantially faster than others can."

The products

86 400's product set is quite robust given how new the company is. Here's a quick rundown:

  • Loans are available for owner-occupiers, investors and refinancers (but not vacant land purchases).
  • Fixed interest rates start from 2.88% and variable rates start from 3.09%.
  • A maximum insured LVR of 80% means borrowers will need 20% deposits.
  • There are interest-only options in addition to principal and interest.
  • All loans have redraw facilities and you can open an offset account with a variable loan.
  • Borrowers need to be on PAYG incomes, so self-employed borrowers are ineligible at the moment.

You can open multiple offset accounts with a variable loan, and you can choose to use both a Pay and Save account (86 400's transaction and savings accounts) as offsets.

86 400 is partnering with two mortgage aggregators, Vow Financial and SFG. Together that equates to 2,800 brokers in Australia now offering loans from 86 400.

The process

86 400 has built the platform from scratch and partnered with an array of companies to create a faster mortgage application. This speed is achieved by reducing approval times and replacing paperwork with digital verification of identification, income and expenses, plus an automatic, upfront property valuation.

You cannot actually apply for an 86 400 mortgage without going through a broker, although that may change in the future. The platform is designed for the broker as much as for the borrower.

"The broker captures a lot of information about the customer in their CRM [customer relationship management] system," said 86 400 Home Loan Lead Melissa Christy. "When the customer decides that 86 400 is the lender they want to go with, all that information they've collected upfront will click through to the 86 400 application."

A borrower won't need to resubmit the information they've already given to their broker. The borrower will only need to spend a few minutes verifying their identification through their phone and inputting their online banking details.

"The customer only needs a couple of minutes to log in, put in their credentials and then we take the data and categorise it and populate it back into the application," said Christy.

This is not only faster but also gives the lender a clear view of an applicant's financial position.

"One of the challenges in the broking industry and the banking industry for home loans is accurately capturing, for responsible lending purposes, a true picture of expenses," said Bell. "Because we're taking a 12-month history of the borrower's banking relationship we get a very accurate picture of expenses and income, which enables us to get to a yes or no credit decision much quicker."

86 400's process also includes a property valuation, in partnership with CoreLogic, which is triggered automatically on the broker side before the borrower starts the application itself. This ensures the applicant doesn't waste time applying for an 86 400 mortgage when their loan-to-value ratio is insufficient.

Our verdict

There are already a couple of lenders offering fast, digital-only home loans, such as Tic:Toc and Athena. But 86 400 is unique in that it is partnering with mortgage brokers and has designed its platform to make life easier for brokers and borrowers.

For a lot of borrowers, this combination of speedy technology and the guidance of a broker could prove very compelling. After all, nearly 60% of Australian borrowers now get their mortgage through a broker.

86 400's products are also fairly comprehensive. Investors, refinancers and home buyers are all eligible, with the only exception being those who are self-employed or have deposits under 20%. Fixed rates from 2.88% are also competitive in the current market.

An offset account is always a hugely useful tool to help you save on interest repayments. 86 400 is designed as a mobile-first banking service that gives customers a really clear view of their saving and spending, which makes their offset accounts convenient as well.

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