flagFounded: Founded in 1989, relaunched by Westpac in 2011
businessOwned by: Owned by Westpac, operated by St George Bank
monetization_onFunded by: Retail deposits and wholesale capital markets
securityLMI Provider: Westpac LMI (WLMI)and Arch Capital (WLMI –A)
account_balanceLender type: Subsidiary of a Major Bank
Westpac has owned the rights to the Bank of Melbourne brand since 1989, but it was only after they saw that their subsidiary St George Bank wasn’t doing well in the Victorian market that they decided to relaunch Bank of Melbourne.
Bank of Melbourne is actually just a rebranded version of St George Bank!
They’ve got the pricing and systems of a major bank along with a focus on serving the Victorian market. Their home loans are often well priced as they’re trying to gain a foothold, particularly with customers that use mortgage brokers.
Westpac sees St George and Bank of Melbourne as being the first choice for first home buyers while Westpac tends to have high net worth investors.
How do Bank of Melbourne’s home loans compare?
They’re great at
- First home buyers with small deposits
- Guarantor loans for first home buyers
- Property investors
- They’ll work with temporary residents and Australian expats
- Construction loans
- Great interest rates even if you have a small deposit
- Working with mortgage brokers
- SMSF loans
- Upfront bank valuation available in some cases
- People who want branch access
But they’ve got some drawbacks…
- LMI can be expensive if you’re borrowing over 90% of the property value
- Complex loans that don’t meet standard bank policy
- People with bad credit
- If you live outside of Victoria, you’ll be referred to St George Bank
- Slow loan processing times when busy
- For self-employed borrowers, they are very conservative and require a consistent income over the last two years.
What home loans types do they have?
Bank of Melbourne has all the same home loans that St George Bank has.
Their professional package is known as the Advantage Package and it’s a great choice if you are borrowing over $250,000. In return for paying an annual fee you’ll get a discounted interest rate and a range of discounts on other products such as your offset account and credit card.
Their basic loan has no annual fees, but normally has a higher rate, and so it is more suited to people who have smaller loans. BOM has a Line of Credit known as a Portfolio loan which is a great choice for investors that buy and sell property or shares regularly.
Keep an eye out for specials that BOM offers from time to time on fixed rate loans. When these are on offer they can be some of the lowest in the market.
Their low doc loan isn’t the most competitive and has strict qualifying criteria so isn’t in high demand.
Tips for getting a great rate with Bank of Melbourne
Most lenders don’t offer great interest rate discounts on 90% or 95% home loans, however Bank of Melbourne is one of the exceptions!
If you don’t have a deposit then their family pledge loan is a type of guarantor loan that can be used to buy a home with help from your parents.
Use Bank of Melbourne’s minimum required documents checklist to prepare for your home loan application.
Note: This is the latest home loan checklist as of June 2019. Please refer to Bank of Melbourne for their most up-to-date document requirements.
Bank of Melbourne client story: Stuart, Vic
- To buy his second home and rent out his first.
- Needed to get his stratum title unit purchase approved.
Stratum title, cash out equity, investment.
Coming to the end of the fixed period on his Rams home loan, Stuart cash out some equity in his home to buy a unit that was much closer to his place of work.
Combined with his own savings, Stuart had a considerable deposit to put down.
Despite having a good deposit and a great income, the unit that Stuart wanted to buy was stratum title, a unique property title that most lenders have restrictive lending policies for.
Although he could afford the home loan, he couldn’t find a lender that would accept the stratum title unit as security.
Bank of Melbourne, which is owned by Westpac, is not as strict when it comes to lending for stratum title units.
Most lenders will restrict lending to 80% of the property value but Bank of Melbourne was able to lend up to 85% of the property value for the stratum title purchase.
That’s because Bank of Melbourne/Westpac’s LMI provider Arch Capital usually offers the cheapest LMI premium when it comes to 80-92% LVR home loans.
In the end, Stuart was able to move into his apartment unit with his family and rent out his old home as an investment property.
Compare Bank of Melbourne to other lenders
Are you considering Bank of Melbourne? One of our mortgage brokers can help you to compare your options!
Talk to one of our mortgage brokers by calling us on 1300 889 743 or complete our free assessment form.