Need to move fast on a home loan? Maybe it's time to consider a digital lender.

Home loans from digital lenders are a popular option for home buyers looking for an alternative to traditional banks.
Meredith Williams
Meredith Williams

We all shop online, bank online, chat and socialise online, buy home or car insurance and plane tickets online - why not consider doing your home loan online?

Imagine this: cutting down on paperwork, no more driving around looking for a parking spot to visit your broker at their offices, and best of all - possibly a quicker time to approval.

Now I know what you're thinking - is this even safe, will they even last, am I protected like I would be with one of the big 4 banks?

These are all valid questions. And the short answer is, yes. Here's why.

What are digital lenders?

Even though you may not have heard about one of these digital lenders, it doesn't mean they're untrustworthy. Most of these companies are owned or funded by a larger lender - even the smallest lender is required to adhere to Australian financial regulations.

What you might not realise is that when you take out a home loan, it is the lender who is actually taking the risk - not you. If for some reason a lender closes, your home loan is likely to be sold to another lender. Therefore, this should have very little effect on your repayments and the only change will be the company servicing your loan.

Here's a little more information about some of the digital lenders including which organisations fund or support them, and the digital innovations they offer:

  • 86 400 - This is Australia's first smartbank, offers conditional approvals in under 24 hours for completed applications, killer rates and government backed guarantees.
  • UBank - This entirely digital lender is backed by NAB, one of the nation's largest banks.
  • Tic:Toc - This startup claims to be able to process your mortgage application faster. They're backed by Bendigo and Adelaide Bank.
  • ME Bank - Member's Equity was established back in 1994 and went fully digital in 2012.

If you are concerned about the safety of a digital 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.

What are the benefits of using a digital lender?

  • Lower rates. Digital lenders have the benefit of low overheads, as they don't have to run and manage in store branches, therefore they can then pass greater savings onto the customer - you in the form of lower interest rates. Many of the digital lenders listed offer loads of innovative technology and a wide product range to suit a variety of customers.
  • Convenience. Digital lenders also have a heavy focus on delivering user-friendly website and application portals that allow you to speed through the process, this is how they are able to offer faster approvals than, say, traditional lenders. They also offer the ability to complete your mortgage application process from home rather than having to visit a bank branch.
  • Speed. Digital lenders such as 86 400 can offer a home loan up to 6 times faster than the Big 4 banks. How? They offer unconditional approvals in under 24 hours for completed applications, electronic ID checks, electronic income and expense verification and all loan documents are issued and signed electronically.

Are there any downsides to going with a digital lender?

  • Face-to-Face. If you're uncomfortable with banking online, or you'd prefer face-to-face communication with your lender, then a digital home loan likely isn't right for you. But, you’ll find that digital lenders and brokers are all available by phone, and some now even by Facetime.
  • For regional properties. Some smaller digital lenders aren't able to lend money to buy homes in some regional areas as they can be regarded as a higher risk. When buying a rural property, it is worth asking your broker to suggest lenders that lend money for homes in regional areas of Australia.

How do I get started?

Online, of course!

Why not start with a quick comparison check of the best available rates available to you so you can get a good picture of the best deal for you from over 30+ lenders, including digital lenders.

Find me a home loan, today.

Or, if you have a home loan and are keen to see if there is a better deal out there for you, why not check your loanScore. It takes 2 minutes and totally free and you can quickly see if you can be saving by refinancing.

Check my loanScore, today.

Meredith Williams
Meredith Williams

* Two year fixed rate, owner occupier, P&I package loan with a maximum LVR of 70% and a loan amount >=$150k. Lender rates and products may change. We cannot suggest you remain in or switch to any loan until we complete our assessment. Fees and charges apply. ^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rate is calculated on the basis of a loan of $150,000 over a term of 25 years. ± All loan applications are subject to uno assessment and lender approval. uno does not guarantee that it will be able to find a customer a better loan than the one they currently have or to save them money.