businessOwned by: A group of around 30 Industry Super Funds
monetization_onFunded by: Retail deposits, superannuation and wholesale capital markets
securityLMI Provider: QBE LMI
account_balanceLender type: Bank
ME Bank is in a league of its own. It’s owned by superannuation funds and markets its products through mortgage brokers and workplace banking. Workplace banking is another way of saying they’re closely affiliated with several unions.
ME is smaller than the other banks but is able to compete because of the financial strength of its shareholders. They’ve come out with some great products and low interest rates and given the major banks a run for their money.
How do ME Bank’s home loans compare?
They’re great at
- Low variable and fixed interest rates
- In some cases, they can consider owner builder loans
- They can sometimes assist if you’re on maternity leave
- They can sometimes consider display homes and student accommodation
- They have a DUA with QBE which means they are more flexible for loans up to 95% of the purchase price
- Working with mortgage brokers
- Working closely with unions and industry super funds
But they’ve got some drawbacks…
- Their banking systems are a mess and they regularly have delays and errors
- Higher interest rate may apply if you have a small deposit
- Lending policy is very strict when it comes to unusual employment types
- They have a higher turnover of staff outside of their home state of Victoria
- Assessing loans using credit scoring instead of common sense
- They’re not great at helping people with a bad credit history
- Very small branch network
- Low doc home loans unavailable
- They have ties to unions which can irk some people
Coronavirus / COVID-19: ME Bank home loan policy changes
ME Bank has announced several temporary home loan lending policy changes.
- Refinance and equity release/cash out: For refinance with an equity release (cashout) of $50,000 and above (previously the limit was $100,000), ME Bank now requires supporting evidence for the proposed use of released funds. They have tightened the policy towards this and will be processing the loan only after getting the supporting evidence.
- Essential Service worker: This is an area that ME Bank is focussing on now. Their focus is borrowers working as Nurses and medical/healthcare professionals, Teachers, Ambulance Officers, Fire Fighters, and Police Officers.
- For faster approvals at current stage: You need to provide an interim bank transaction statement no older than 7 days at the loan submission date.
- 30 day bank statements: In addition to the usual paperwork, they are now asking for a 30 day bank statement (90 days for self employed) as part of their approval process.
ME Bank is now able to use the JobKeeper payment for the servicing of PAYG borrowers. The following documents for proof of income are required with the loan submission:
- One payslip, not older than 4 weeks / 28 days (6 weeks / 42 days where payslips are monthly);
- Verbal or written confirmation from the employer that a return to previous working conditions is expected following the current COVID-19 crisis.
- Anyone of the following: one payslip dated prior to 1 March 2020 containing the YTD income for 3 months verifying regular income received prior to COVID-19; or a letter from the employer (dated, signed, and on employer letterhead, no older than 4 weeks) confirming normal regular income received by the applicant prior to COVID-19.
Coronavirus / COVID-19: ME Bank mortgage relief options
ME Bank has announced a repayment pause for up to 6 months for home loan customers financially affected by COVID-19 as well as for personal loans and credit cards.
Apart from a home loan repayment freeze, they also have general financial hardship arrangements in place.
You can call ME Bank on 13 15 63 to go over the available mortgage relief options.
Delays are more costly than you think…
If you’ve found your dream home and you want to make an offer, then you’d better be sure that the lender you’re using is going to get you a quick loan approval.
Unfortunately we’ve seen some customers miss out on the home they want because their lender had large delays and didn’t get their loan approved in time. Another buyer with a faster bank swoops in signs the contract and your home is gone.
You can lodge an escalation to request a faster loan approval, but guess what? Everyone else is doing that too! So escalations rarely do anything.
ME has a small credit team approving loans and sometimes has some really good offers which cause a large number of people to apply. That’s why we often use ME Bank for refinancing, where there is no rush, but rarely for purchases where time is critical.
What home loan types do they have?
ME has their Basic Home Loan which is a no frills loan with a low interest rate.
However most people choose ME’s Flexible Home Loan with their Member Package which is similar to the professional packages offered by the major banks. You’ll pay an annual fee and in return you’ll get a discount on your interest rate as well as waived fees on other banking products.
ME is a good choice for fixed rate loans where they tend to have competitive rates, especially if you want to fix for 3 years. Unlike other lenders, they offer fixed rates of up to 7 years but terms over 5 years come at a premium.
They don’t offer any specialty home loans. ME are a great choice if you are refinancing and owe less than 80% of the property value. They’re less suitable for investors, first home buyers, self-employed borrowers and pretty much anything that is complex.
Tips for applying with ME
Around 5,000 of Australia’s 11,000 mortgage brokers are accredited with ME Bank so a good place to start is by asking your mortgage broker if they offer ME’s home loans.
Unlike other lenders, it’s rare to see ME offer a special discount for larger loan sizes, so if you are borrowing over $1 million we’d recommend that you ask your mortgage broker to put in a pricing request with several banks to see if they can offer you something better.
Use ME Bank’s home loan application doc to prepare for your home loan application.
Note: This is the latest home loan checklist as at October 2017. Please refer to Liberty for their most up-to-date document requirements.
ME Bank client story: Jeremy and Liz, NSW
- To buy first home.
Jeremy and his fiance wanted to buy an off the plan property as their first home but they were going to have a problem getting approved for a home loan.
Although Jeremy was working full-time and earning a good income, Liz had recently changed jobs and had only been in her new role for 2 months.
Not many lenders will accept borrows on probation and will generally only go up to 95% of the property value.
ME Bank can be flexible on the lending policy for probation and because the broker was able to show that Liz would be earning a strong income after probation, they were able to get approved.
Compare ME to other lenders
Not sure which lender is right for you? Our Home Loan Experts can help!
Talk to one of our mortgage brokers by calling us on 1300 889 743 or complete our free assessment form.