Home loan disruptors boost competition for property borrowers

by Duncan Hughes 

  • Sep 14 2017 at 12:15 AM

Property borrowers are being offered new online tools that could make choosing a loan cheaper, faster and more efficient.

They range from a complete online lending service to websites that create a marketplace where mortgage brokers and lenders can bid for borrowers' business by offering the best rate and terms.

Tic:Toc Home Loans claims to have digitised every step in property buying to reduce the time needed to approve a loan from 22 days to 22 minutes.

That includes free property valuation, credit and identity checks, assessment of borrowing capacity and validation financials, according to chief executive Anthony Baum, whose company is 35 per cent owned Bendigo and Adelaide Bank.

Tic:Toc is authorised by the Australian Securities and Investments Commission.

It targets buyers that have 20 per cent deposits with highly competitive comparison rates of 3.69 per cent for owner occupiers and 3.99 per cent for investors. Offset accounts cost an additional $10 a month.

Lower fees

Borrowers pay only statutory fees, such as stamp duty, which means a saving of about $1500 in administrative costs.

"The way home loans are done is way out of date," says Baum. "We believe mortgages are like a utility, such as electricity, and that borrowers are looking for the lowest cost."

Other new digital offerings help borrowers find a mortgage broker, which acts as an intermediary between lender and borrower, or a loan that best matches the amount required and the borrowers' capacity to pay.

Joust Home Loans invites would-be borrowers to provide details online of their loan type, size and desired term on which 14 lenders can bid. They include Bank of Melbourne and St George Bank, part of Westpac Banking Corporation.

"The banks have people online bidding for the business," says managing director Mark Bevan.

Lenders pay about 20 basis points for the service, compared with about 95 basis points in upfront and trailing commission for mortgage brokers, he estimates. That means lenders should be able to rebate some of the savings to the borrower.

"We do not offer advice," says Bevan about the difference between Joust and a mortgage broker.

Read more: http://www.afr.com/real-estate/home-loan-disruptors-boost-competition-for-property-borrowers-20170907-gycqii#ixzz4tBW2MxOS 
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