Digital and neobank home loans
Digital challenger banks are gearing up to give you more control of your mortgage, and maybe lower repayments too.
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The rise of neobanks, also known as digital banks, is steadily changing the way Australians spend, save and borrow. The Australian mortgage market now has several neobanks offering competitive interest rates and flexible, digital-first lending services.
So what exactly are neobanks, how are their home loans different and is a neobank home loan right for you?
Which digital lenders offer home loans?
Here are all the neobank and digital lenders we know have launched or are planning to launch mortgage products in Australia.
|Tic:Toc||Live||The first high-tech lender in Australia, Tic:Toc offers fast online application processing and competitive home loan products. Tic:Toc only offers home loans (with offset accounts).|
|Athena||Live||Athena's mortgages for owner occupiers and investors offer competitive rates that fall over time as you build equity. Athena's loans are available to purchasers and refinancers. Athena focuses on home loans only and doesn't offer other products.|
|86 400||Live||86 400 offers their own range of home loans for buyers, investors and refinancers. 86 400 has partners with several broker networks and also have their own call centre.|
|Nano||Coming soon||Nano is planning to launch home loans for refinancers early in 2021, and purchasers at a later stage. Nano's loans will be digital only and offered via a smartphone app.|
|Volt||Testing phase||Volt has a full banking license, which is a major step. They haven't announced details about their mortgages yet.|
|Revolut||TBA||We don't know much right now, but Revolut has been shaking up the mortgage market in the UK.|
What is a neobank?
A neobank is an online-only bank that offers its services digitally, usually through an app, rather than with physical branches. Because these banks don't have the overhead cost of operating branches, they can generally offer better rates on savings and loan products.
While there are many online-only financial institutions, what sets neobanks apart is that they don't operate on legacy systems. In other words, the technology driving digital banks has been built from the ground up and doesn't rely on any existing processes.
What about other online banks?
The term neobank feels a bit like a marketing term. And it kind of is. Neobanks are selling themselves as something different from the traditional banks. They're challenging the traditional finance world using data, apps and a digital-first approach.
There are a few other online lenders who are really competing with the neobanks (or more correctly, against whom the neobanks will compete). These include:
- UBank. A digital-only brand owned by NAB, UBank is challenging traditional banks in the same way as neobanks.
- Loans.com.au. A completely digital lender, loans.com.au competes with low rate products and pride itself on personable phone and online service.
- ING. A traditional lender, ING has been online-first for a while and have a very popular app.
- ME Bank. Formerly a credit union, ME Bank is now an entirely online lender.
Find more online lenders and their mortgage products on our online lenders page.
How do neobank products differ?
Neobank products are driven by the technology that underpins their platforms. At present, most Australian neobanks offer transaction accounts, savings accounts and/or prepaid spending cards. Many neobank accounts also allow customers to hold multiple currencies.
In addition to mortgages, 86 400 offers a range of banking services with low fees and plenty of flexibility. This is something Nano has promised when it launches too. Lenders like Athena and Tic:Toc focus entirely on home loans.
The real point of differentiation for many neobanks comes in how users interact with them. Neobanks typically tie their products to apps that provide detailed tracking of their savings and spending. The apps can also categorise spending so users know where their money is going. This will help give customers a clear overview of their finances. Many utilise AI to help build savings and budgeting goals for customers, and some tout their apps' seamless payment systems.
At this stage, with few neobanks lending to Australian borrowers, not every new lender offers borrowers a detailed look at their data via an app. But we expect this to become more common as this part of the mortgage industry expands.
Compare home loans from neobanks and digital lenders
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How do I switch to a neobank?
At present, many neobanks may not be able to fully take the place of your main financial institution. If you want to access neobank products, you can compare them in the table below. Some neobank products are not yet available, but you can sign up for the bank's waitlist to be among the first alerted when the products launch.
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Home Loan OffersImportant Information*
Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
Up to $4,000 refinance cashback. With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get up $4,000 cashback and borrow up to 90% of the property's value. (Terms, conditions & exclusions apply).
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.
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