Online lenders can deliver sharp rates and innovative products. Plus, many of them are backed by larger, traditional lenders.
Online lenders are a popular option for homebuyers on a strict budget, or anyone who wants to save money. With sharp rates, a wide range of products and easy-to-use platforms, they can be a great alternative to traditional banks.
UBank Home Loan Offer
Apply for the UBank UHomeLoan Variable Rate and get a low rate plus no upfront or ongoing fees as well as unlimited redraws. UBank will cut its variable rates for new and existing customers on June 28, making this rate even lower.
- Interest rate of 3.59% p.a.
- Comparison rate of 3.59% p.a.
- Application fee of $0
- Maximum LVR: 80%
- Minimum borrowing: $200,000
Compare online home loans and online brands
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Are mortgages from online lenders safe?
When researching online lenders, it's possible you won't be familiar with some of the brands. However, you can rest easy knowing that online lenders are often backed by large bricks-and-mortar banks.
UBank is a subsidiary of NAB. Newer online lender Tic:Toc, which touts its ability to give borrowers full approval in as little as 22 minutes, is backed by Bendigo Bank. And you might be surprised to learn how many well-established financial brands offer mortgages entirely online, such as ING and ME Bank.
With the backing of large, well-established brands, you can be certain the vast majority of online lenders are stable. However, if you are concerned about the safety of an online lender, you should check that they have a Australian Credit Licence (ACL). Lenders should list their ACL number at the bottom of their webpage. This number can be cross-referenced with ASIC Connect's databases.
Finally, it's important to keep in mind that when you take out a home loan, the lender is the one actually taking the risk. In the extremely unlikely event an online lender closes up shop, your home loan likely to be sold to another lender. This should have little to no effect on your repayments, and the only change will be the company servicing your loan.
Tell me more about some of these online lenders
Here's a little more information about some of the online lenders in our table, including which organisations fund or support them, and the digital innovations they offer:
- UBank. This entirely digital lender is backed by NAB, one of the nation's largest banks.
- Tic:Toc. This startup boasts that its online application tool can process your mortgage application in just 22 minutes. They're backed by the Bendigo and Adelaide Bank.
- Loans.com.au. A Brisbane-based online lender, Loans.com.au is backed by Firstmac, Australia's largest non-bank lender.
- ME Bank. Member's Equity was established back in 1994 and went fully digital in 2012.
- ING. This online bank is part of the global, Dutch-based financial group of the same name.
Why should I choose an online home loan or lender over a big bank?
Because they don't have the overheads of operating branches, online lenders can pass their savings onto you in the form of much lower interest rates. Many online lenders also offer innovative products and have a wide product range to suit a variety of borrowers.
Online lenders also often have easy-to-use platforms that can help you speed through the application process. And with a heavy focus on tech development, they're often able to offer faster approvals than traditional lenders. Moreover, they can offer the ease and convenience of completing the mortgage application process from the comfort of your own home, rather than having to visit a bank branch.
Are there any downsides to going with a digital lender?
- For regional properties. Some of the smaller online lenders aren't able to lend money for properties in regional areas. In the mortgage world, rural areas are regarded as riskier security, and many online lenders don't have the size nor expertise to handle these types of loans. When purchasing a rural property, it is worth asking around for the lenders that permit home loans for regional areas.
- The personal touch. If you're uncomfortable with using the Internet for your banking, or you'd prefer face-to-face communication with your lender, then an online lender would not be able to meet your needs.