Neobank launches home loan offerings

The mortgage products are available for purchasers, refinancers, owner-occupiers and investors as a fully featured loan, with fixed and variable rate options.

The lender’s fixed rate home loans start from 2.88 per cent, with its variable mortgage rates starting from 3.09 per cent.

The loans are funded by customer deposits and a warehouse facility secured earlier this year.

The products are available via accredited brokers operating under credit licences held by aggregators Vow Financial and Specialist Finance Group. However, 86 400 founder and CEO Robert Bell told The Adviser that the lender is looking to expand its broker distribution network.

“We’re very keen to make 86 400 mortgages to as many Australians as possible, that means working with as many mortgage brokers as possible,” he said.

“We’ve started with two really good aggregator partners and a small number of brokers, and we will ramp up slowly as we go through. 

“Our aim is to make 86 400 mortgages broadly available through brokers.”

When asked why the challenger bank has favoured the broker distribution model, Mr Bell said the channel has demonstrated its utility to borrowers. 

“[A] mortgage is still the biggest financial decision that most people will make in their life, and we certainly believe that mortgage brokers provide a really good service in terms of helping people through that process,” he said. 

“To be absolutely frank, it’s mortgage brokers who have generated better deals for customers over the last 10 years, so it makes sense for us to work with them.”

Service proposition

86 400 has noted that in developing its mortgage offering, it sought to identify and address key “pain points” among mortgage brokers, by providing them with a “fully digital solution” that “delivers a faster time to a home loan decision, with next to no paperwork”.

According to the lender, its approval process is up to six times faster than the big four banks. 

“We’ve greatly sped up the time for an approval,” 86 400’s home loan lead, Melissa Christy, told The Adviser.

“We also looked at traditional lenders, which have a list of supporting documents which need to be submitted with the application of three to four pages.

“We are collecting information from customers digitally, so we have reduced the amount of paperwork needed.”

86 400 stated that in order to deliver on its promise of faster processing times, it utilises:  

• Electronic statement capture – electronic capture of income and expenses that are pre-populated and automatically added to the loan application;
• Mobile identity verification – to ensure the customer has been met in-person in a convenient, fast and frictionless way;
• Electronic signatures – online portal for customers to electronically sign loan documents which are sent within six business hours of approval; and
• Limited paperwork – smart technology, meaning applicants are only required to submit a contract of sale for purchases, with no documents required for a refinance.

To facilitate this, 86 400 has partnered with the following software providers:

• Simpology - broker lodgements
• MaxID - identity verification
• Mogoplus - electronic capture of income and expenses and automatic mapping into credit decisioning rules
• Loanworks - origination
• Equifax - electronic ID and bureau
• CoreLogic - valuations
• FMS - issue of loan documents and management of settlement

Ms Christy added: “Our smart technology works on the brokers’ behalf, to make their life simpler every step of the way.

“We know mortgage brokers drive competition and choice for consumers, which is why we have focused on erasing their pain points so they can deliver the best value to customers.”

Mr Bell concluded: “This is a huge moment for the whole team at 86 400, launching our home loans offering just a couple of months after we took our smartbank live to the public.

“We set out to create an entirely new, smarter approach to the home loans application and through technological innovation and collaboration with equally innovative partners we’ve done just that.”

[Related; Neobank to focus fully on brokers]