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86 400 just became the first Australian digital bank to offer home loans without paperwork – but you'll still need a broker
86 400 has become the first Australian digital bank to offer home loans, launching into the market on Tuesday.
The bank has revealed to Business Insider Australia that customers won't have to submit any physical documents other than the contract of sale if they buy a property and will be able to share their financial situation in just a few clicks.
But, despite being digital, customers will still be required to go through a mortgage broker to get a home loan with the bank.
86 400 has become the first neobank in the country to dive into the home loan market.
From Tuesday Australians will be able to get approved for a mortgage in hours, without having to provide a single physical document.
"It means that everything is done digitally. We capture information from the customer digitally, they sign a document, their application form, their load offer, their contract all digitally and they don't have to provide all the paperwork that is needed with other lenders because we will gather it all electronically," 86 400 lending lead Melissa Christy told Business Insider Australia.
Rather than having to submit individual documents, customers are given a simpler alternative.
"We send the customer an email, and they login to a portal with their details and then we collect it directly from their bank and other financial institutions. By using technology we're getting a very accurate picture and making it easier in the process," Christy said.
While it comes just two months after the bank publicly launched, Christy and 86 400 have spent the last two years designing the system from scratch. It hopes that work means approvals get finalised far quicker than with its competitors.
"We're aiming for six times faster than the average of the big four banks, so basically within 24 hours you'll know if you've been approved and many customers will know much quicker than that," CEO Robert Bell said.
The initial home loans will be available to home buyers, refinancers, owner-occupiers and investors and as both principal and interest, and interest-only loans. Unusually, those who opt for a variable rate will be able to offset both their 86 400 saving and transaction accounts, with fixed rates starting at 2.88% and variable at 3.09%.
However, there's a catch: you won't be able to do it all within the 86 400 app. Despite being a digital bank, you'll still need to go through a living, breathing mortgage broker.
"We're launching through brokers because we think it's the most efficient way to get to as many Australians as possible. That's why we built the system to solve their pain points as well," Bell said.
While Bell didn't rule out going directly to the customer further down the track, the bank did acknowledge that brokers give the bank a face it otherwise wouldn't have.
"Given home loans are such a big decision, customers like that face-to-face element. We're also a new brand so to have someone recommend us as a lender helps," Christy said.
With even the government kowtowing to brokers, perhaps digital banks are wise to keep them onside for now.
