Online home loans and lenders

Are online home loans safe?

Just because you haven't heard of a small online lender, doesn't mean it's unreliable.

You can get online lenders that just offer you loans or you can get online banks, which also provide bank accounts. Many online banks, also known as neobanks, are owned or funded by a larger lender, and even the smallest lender is bound by Australian financial regulations.

If you are concerned, you can check that an individual lender has an 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.

In the extremely unlikely event that an online lender closes up shop, your home loan is likely to be sold to another lender. This should have little to no effect on your repayments or overall loan, and the only change will be the company servicing your loan.

What are the benefits of using an online home loan lender?

• Lower rates. Because they don't have the overhead 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.
• Convenience. Online lenders also often have easy-to-use platforms that can help you speed through the application process. They also offer the ease and convenience of completing the mortgage application process from home rather than having to visit a bank branch.
• Faster processing. Online lenders are innovating at a fast pace, and many of them offer super swift loan processing times – including the ability to assess, review and approve your home loan within hours.

Are there any downsides to going with a digital lender?

There are a few things worth noting if you're considering a digital lender.

• Location. 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 or 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.
• Not in person. 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 home loan probably isn't right for you.
• Vanilla loans. While it is improving, the speed and convenience of an online lender are typically only for those lenders who tick all the right boxes. If you're anything other than PAYG employed or you don't have a perfect credit score, even online lenders will still need more time to process your application.

How do I apply for an online home loan?

Unsurprisingly, applying for a home loan with an online lender is done online. You will usually find an online application form on the lender's website. Simply follow the steps to enter all your information. Often, the online lender will assess your application in real-time as you fill out the fields.

Online home loan applications require much of the same documentation as with any home loan lender. They will still want to know your income and expenses to make sure you can meet your repayments.

Documents you will need include the following:

• Proof of identity
• Income documents (e.g. payslips or business activity statements)
• Property details
• Bank statements

Some borrowers may need to provide additional information, such as self-employed borrowers or those with poorer credit scores – this can slow down the application process.

Learn more about 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:

• Athena. This digital fintech lender offers low-rate mortgages and an entirely online service.
• Unloan. This digital lender is owned by the Commonwealth Bank and offers fast loan applications for refinancers.
• Homestar. A 100% online lender, Homestar has been providing mortgages to Australian borrowers since 2004.
• ING. This online bank is part of the global, Dutch-based financial group of the same name.
• AMP. While AMP is a large, traditional financial services company its lending business is fully online.
• 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. It's owned by the Bank of Queensland.
• Nano Home Loans. Nano is an online lender with low rates and a fast approval process, currently only available to refinancers.
• Tic:Toc. This lender boasts a fast online application tool, and it's backed by the Bendigo and Adelaide Bank.
• UBank. This entirely digital lender is backed by NAB, one of the nation's largest banks.
• Yard. A 100% online lender with a wide range of home loan products.

Why you can trust Finder's home loan experts

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