The digital bank’s new mortgage product is aimed at helping borrowers clear the deposit hurdle.
UBank has launched a new 10 per cent deposit home loan with no lenders mortgage insurance (LMI) for owner-occupiers and property investors.
The Flex and Neat home loan lets borrowers make principal and interest (P&I) repayments and take out loans up to $2 million for 90 per cent LVR.
UBank said that borrowers with around $60,000 and a PAYG income of $125,000 may be able to purchase property worth up to $450,000.
The low-deposit loan is aimed at giving younger buyers more flexibility to enter the market sooner, while giving investors earlier access to their next property purchase.
UBank claimed the gap between a traditional 20 per cent deposit and its 10 per cent deposit home loan could mean borrowers save up to $175,000 upfront.
George Srbinovski, head of broker distribution at UBank, told The Adviser that the new low-deposit home loan would help younger Australians get into the property market sooner.
“It’s around the time it takes to get a deposit… And we’re here to help young Australians get into the property market as quickly as possible,” Srbinovski said.
“This product isn’t just for first home buyers. This product is for investors. It’s for upgraders, people looking to purchase their second or third properties. So it does cover quite a wide range of customers.”
UBank chief home lending officer, Ray Jokhan, said the new 10 per cent deposit would help customers build equity.
“As they build equity and their loan-to-value ratio drops below 80 per cent, they become eligible for better rates – and we regularly review those with them,” Jokhan said.
UBank investing in broker tech
Speaking to The Adviser, Srbinovski said UBank’s lending growth had been driven by heavy investment in the broker channel and technology.
He pointed to a rebuilt loan lodgement platform, quicker loan application submission times, and a fully digital end-to-end settlement process.
“If I look at the Ubank story, it’s very much about speed to get a deal into us as frictionless as possible. We’ve made a significant investment in our lending operations team to make sure that they can ensure quicker approvals,” Srbinovski said.
Despite UBank parent company National Australia Bank’s (NAB) focus on accelerating proprietary lending, Srbinovski insisted that brokers were key to UBank’s strategy.
“We’ve done a significant amount of investment to the broker channel to underwrite home loans a lot quicker, so they can serve more customers and give them great, great customer service.”
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