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How technology is revolutionising home loans

Technology will radically change the way you buy your next home.

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How technology is revolutionising home loans 2

As technology evolves, the way we interact with financial services is influencing the home loan process. Australians, in particular, are at the forefront when it comes to embracing new banking technology, with a 2015 Bain & Company survey showing we were the fastest adopters of mobile banking in the world. Meanwhile, Google research from 2014 showed 77% of all home loan transactions started online.

This trend is set to continue as technology improves and the home loan process becomes smoother and faster, according to NextGen.Net sales director Tony Carn.

NextGen.Net, which provides much of the technology that sits behind banks’ home loan approval processes, has seen this change happening in several ways that may be invisible to borrowers. So here we look at the key innovations that could have an impact on your next home loan.

Five Aussie fintechs shaking up the mortgage market

The way your application is assessed

Assessing whether an application for a home loan fits a lender’s requirements used to be a manual process that could often take days. Now, Carn says, it can happen instantly at the point of sale.

“We’re bringing the assessment process to the point of sale. Before you have a loan application to a lender you can now instantly figure out does it meet the credit policy, the postcode restrictions, the property type; all of that is now available electronically at the point of sale,” he says, adding that this can help brokers or bank branch staff assess whether or not a home loan fits a lender or customer within moments.

“If I’m a broker, I can tell before I even hand an application to an assessor whether it meets their credit policy.”

Moreover, technology is allowing lenders to update their serviceability policies - the standards by which they assess whether or not they believe borrowers can afford a loan - in real time. Lenders can even perform valuations on property within moments instead of days.

“We have far better use of valuation data. Lenders can do automated desktop valuations or immediately know if they need a curbside valuation,” Carn says.

Providing your documents

Providing all the documents necessary for a home loan can be a tedious and time-consuming process. This is rapidly changing as lenders can now perform a number of checks and receive a number of your documents electronically.

Digital applications and document submissions can also make it easier for you to apply for a home loan by outlining exactly what details are required by individual lenders at any given time. In some cases, you may even be able to sign forms electronically and save time on visiting a branch as part of the process.

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Four tech tools changing home loans

Technology is making the home loan process faster and delivering more power to consumers. Here are some of the most popular tools changing the way you’ll buy your next home:

1. Automated valuations and online valuation tools

In order to lend you money for a home, mortgage providers have to assess what a property is worth. This used to mean physically sending a valuer to examine the property and the surrounding neighbourhood. Now, sophisticated mathematic modelling can figure out a property’s estimated value within seconds.

Automated valuation models are also putting power into the hands of consumers. Services like Onthehouse.com.au and Domain.com.au can arm you with information on a property’s value before you bid - or before you put your own house on the market.

2. Online lenders

Online-only lenders don’t have the overheads of a branch network, and can often pass on these savings in the form of more competitive rates. On top of this, they offer the convenience of being able to go through much of the mortgage process from the comfort of your home.

3. Optical character recognition

This technology allows computers to read scanned documents and contextualise the content. For example, a computer using optical character recognition could go through scanned copies of your payslips and not only read all the information, but understand what each bit of it meant. This has the potential to be a massive timesaver in the home loan process, as it can pull out the relevant information and pre-populate application forms with it.

4. Electronic signatures

Services like DocuSign are already widely in use in the United States, and are gaining traction in Australia. These services eliminate the need to physically send paperwork back and forth for signatures, but provide a secure online portal for customers to digitally sign documents. A major bank in Australia is moving toward adopting electronic signatures in the year ahead, according to NextGen.Net’s Tony Carn.

Verifying your info

“Many lenders can now electronically verify the identity of the customer at the application stage, taking out unnecessary paperwork and giving greater robustness around the credit approval process,” Carn says. This technology can bring the credit decision process down from several days to “a matter of minutes, or real time”.

Another piece of technology lenders are adopting is the use of electronic signatures. This means borrowers won’t have to post or fax signed documents back and forth.

“This year will see the first of the major banks make electronic signing of applications available, and one of the majors will be electronically delivering documents to customers, taking the process out of the post,” Carn says.

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What it means for you

The end result of all this is a faster home loan process. Carn says we can also “Expect to see significant changes in the way technology better empowers users in the home loan process.”

“I think we will see, in the not too distant future, lenders empower their frontline staff to provide unconditional approval on the spot. At the point of sale, they will have ordered the valuation, uploaded the documents, fulfilled the checklists and unconditionally approved the loan,” Carn says. “That makes for a fantastic customer experience.”

This could be a significant boost to online-online lenders. But Carn says the days of going through an entire home loan process digitally from beginning to end aren’t here quite yet.

“If a lender is handing over $500,000, I don’t think full digitisation will happen anytime soon,” he says. But whether or not securing a home loan becomes as easy as shopping online in the near future, Carn says the days of waiting protracted periods of time for an approval are behind us.

“We’re moving toward lightning-fast, real-time point of sale approvals.”

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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR ≤ 80% (Owner Occupier, P&I)
2.19%
3.36%
$0
$395 p.a.
80%
Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.
IMB Budget Home Loan - LVR ≤80% (Owner Occupier, P&I, NSW and ACT borrowers only)
2.61%
2.67%
$449
$0 p.a.
80%
A competitive variable rate for borrowers with 20% deposits saved. Available for NSW and ACT borrowers only.
Yard Variable Home Loan - LVR 80% Special (Owner Occupier, P&I)
2.39%
2.42%
$0
$0 p.a.
80%
A very low variable rate loan for home buyers with an optional offset account ($10 monthly fee). 20% deposit required.
Well Home Loans Balanced Fixed Home Loan - 2 Year (Owner occupier, P&I)
2.22%
2.21%
$250
$0 p.a.
90%
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.
Athena Celebrate Home Loan - 60% LVR  Owner Occupier, P&I
2.39%
2.39%
$0
$0 p.a.
60%
A very low variable rate for home buyers with 40% deposits or equity. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
IMB Budget Home Loan - Special LVR  ≤90% (Owner Occupier, P&I, NSW and ACT borrowers only)
2.78%
2.84%
$449
$0 p.a.
90%
NSW and ACT customers only. You can get an interest rate discount for a limited time with this competitive variable mortgage.
homeloans.com.au Low Rate Home Loan with Offset - LVR 60% to 80% (Investment, IO)
2.84%
2.76%
$0
$0 p.a.
80%
A competitive rate with no application or ongoing fee. This loan is not available for construction.
IMB Fixed Rate Home Loan - 2 Year Fixed (LVR 90% Owner Occupier, P&I, NSW and ACT borrowers only)
2.39%
3.14%
$449
$6 monthly ($72 p.a.)
90%
NSW and ACT customers only. 2 years fixed interest terms and free access to redraw facility online. Available with a 5% deposit.
homeloans.com.au Low Rate Home Loan with Offset - LVR Under 60% (Owner Occupier, IO)
2.59%
2.51%
$0
$0 p.a.
60%
A competitive rate with no application or ongoing fee. This loan is not available for construction.
UBank UHomeLoan Variable Rate - Discount Offer for Investor Variable P&I Rate
2.89%
2.89%
$0
$0 p.a.
80%
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)
2.54%
2.46%
$0
$0 p.a.
80%
A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan. This rate will drop to 2.54% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.
homeloans.com.au Low Rate Home Loan with Offset - LVR Under 60% (Investment, P&I)
2.59%
2.61%
$0
$0 p.a.
60%
A competitive rate with no application or ongoing fee. This loan is not available for construction.
UBank UHomeLoan Variable Rate - Investor Extra Offer Investor Interest Only
3.29%
3.16%
$0
$0 p.a.
80%
Pay interest only repayments with this special offer for investors.
ME Basic Home Loan - LVR ≤80% $150,000 or more (Owner Occupier, P&I)
2.58%
2.60%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
homeloans.com.au Low Rate Home Loan with Offset - LVR Under 60% (Owner Occupier, P&I)
2.44%
2.46%
$0
$0 p.a.
60%
A competitive rate with no application or ongoing fee. This loan is not available for construction.
Athena Evaporate Home Loan - 60% to 70% LVR  Owner Occupier, P&I
2.49%
2.43%
$0
$0 p.a.
70%
A low variable rate for owner occupiers with 30% deposits. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
homeloans.com.au Low Rate Home Loan with Offset - LVR 60% to 80% (Owner Occupier, P&I)
2.54%
2.56%
$0
$0 p.a.
90%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments. This loan is not available for construction.
UBank UHomeLoan - 3 Year Fixed Rate (Owner Occupier, P&I)
2.14%
2.41%
$395
$0 p.a.
80%
A competitive fixed interest rate loan with no ongoing fees. Requires a 20% deposit.
homeloans.com.au Low Rate Home Loan with Offset - LVR 60% to 80% (Investment, P&I)
2.69%
2.71%
$0
$0 p.a.
80%
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account. This loan is not available for construction.
ME Flexible Home Loan With Member Package - LVR ≤80% $400k up to $699,999 (Owner Occupier, P&I)
2.84%
3.29%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
Athena Liberate Home Loan - 70% to 80% LVR Investor, P&I
2.94%
2.87%
$0
$0 p.a.
80%
A competitive investor variable rate that falls as you build equity. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
UBank UHomeLoan - 1 Year Fixed Rate (Owner Occupier, P&I)
2.14%
2.46%
$395
$0 p.a.
80%
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.
Athena Celebrate Home Loan - 60% LVR  Investor, P&I
2.79%
2.79%
$0
$0 p.a.
60%
Investors with large deposits can get this low variable rate. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
ME Flexible Home Loan Fixed - 2 Year Fixed Rate LVR ≤ 80% (Owner Occupier, P&I)
2.34%
3.98%
$0
$0 p.a.
80%
Get a low fixed rate and pay no application or ongoing fees.
UBank UHomeLoan - 3 Year Fixed Rate (Investor, P&I)
2.29%
2.74%
$395
$0 p.a.
80%
Pay no ongoing fees on this investment loan fixed for 3 years.
Athena Variable Home Loan - Owner Occupier, IO (*now 3.09%, drops to 3.04% on 30 Sep)
3.04%
2.68%
$0
$0 p.a.
80%
Owner occupiers can refinance to one of the most competitive interest-only rates in the market. No application fee and no ongoing fees. This rate will drop to 3.04% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.
UBank UHomeLoan - 5 Year Fixed Rate (Owner Occupier, P&I)
2.59%
2.53%
$395
$0 p.a.
80%
A five year fixed rate offer with no ongoing bank fees.
Athena Evaporate Home Loan - 60% to 70% LVR  Investor, P&I
2.89%
2.83%
$0
$0 p.a.
70%
This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
ME Flexible Home Loan Fixed - 3 Year Fixed Rate LVR ≤ 80% (Owner Occupier, P&I)
2.34%
3.82%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
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Logo for Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan. This rate will drop to 2.54% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.

Logo for UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate

Take advantage of a low-fee mortgage with a special interest rate of just 2.49% p.a. and a 2.49% p.a. comparison rate.

Logo for HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)
HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online.

Logo for ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR ≤ 80% (Owner Occupier, P&I)
ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR ≤ 80% (Owner Occupier, P&I)

Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.

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