businessOwned by: NAB
monetization_onFunded by: Advantedge (NAB)
securityLMI Provider: QBE LMI
account_balanceLender type: Online Bank
Following the acquisition of 84 600 by NAB last year, 84 600 has now merged with UBank. Read our lender review of 84 600 (UBank) here.
UBank was launched with much fanfare despite the fact that CBA‘s online bank HomePath had been shut down just a few years before.
Since 2008, their focus has been taking care of their customers with knowledgeable, honest support and convenient, easy-to-use banking products.
UBank began with online savings accounts before launching its low rate home loans in 2011.
The main problem with UBank is that very few people are actually eligible for a UBank home loan and without guidance, it can be hard to organise your documents to get approved for a home loan.
UBank is ideal for people with significant equity who are tech savvy and would like to refinance their home to a better interest rate.
How do UBank’s home loans compare?
- Online bank with digital home loan process
- Can borrow upto 85% with no LMI for owner-occupied property and refinancing
- No ongoing or annual fees to pay and no application fees on a variable rate home loan
- Two options available for income verification — last twelve months or last six months
- Feature of online application home loan tracker
- Allows unlimited cashouts for loans of up to 80% LVR
- No cash out/top-up restrictions — can do more than once in a two-year period
- No limit on number of debt consolidation
- Probationary income is acceptable
- Thirty-five years loan term
- Flexibility of an unlimited number of redraws
- Can easily make extra payments
- No postcode restrictions
- Faster turnaround time as the application is assessed within 24 hours
- You can usually get the same interest rates through other lenders
- It takes time to transfer money between UBank accounts and a UHome Loan
- They don’t lend over 80% of the property value
- They don’t approve loans to purchase a property
- Offset accounts not offered
- They don’t approve loans for self-employed borrowers
- They don’t do construction loans
- The security property must be standard and in the names of all borrowers
- Their fixed rate loans are not always competitive
- Only 80% of your bonus income for two years iS averaged while servicing your loan
- PAYG income is only acceptable
- Maximum of two applicants can apply for a single loan
- No branch access
- The percentage of applications that actually get advanced is very low
Is online really cheaper?
We’re so used to buying things online and thinking that it’s a better deal because there’s no shopfront and they need less staff.
Unfortunately home loans work quite differently to a credit card or personal loan application. They’re more complicated, require more documents and have strict regulatory requirements.
Lenders like ING that have online home loans actually have a call centre in the background that puts the applications together so they can be processed and approved.
UBank is a call centre not an online bank. It works in the same way as ING and this additional staff cost, not to mention their advertising and their low conversion rate, means they actually don’t get the cost savings that NAB hoped for.
Bait and switch
The standard business model used by lenders in Australia is pretty simple to understand. They offer a low interest rate that’s unsustainable, lots of people apply and then a year later they put the rate up, grandfather the product and come out with a new loan that only new customers can apply for.
UBank offered term deposit and home loan rates that were almost on top of each other. Clearly if you lend money out at the same price that you borrow it at then it’s unsustainable. Now they’re on par with the other banks negotiated discounts and the customers that joined them aren’t actually better off as they don’t even have an offset account.
Watch your interest rate!
If you do have a UBank Home Loan then put a reminder in your calendar to review your rate once a year. If your rate is no longer competitive, then challenge UBank to match other lenders’ offer. If they don’t then refinance to get a better deal.
Our mortgage brokers monitor the interest rates for our clients home loans, free of charge. If you’d like us to help with your home loan then call us on 1300 889 743 or complete our free assessment form.
What home loans types do UBank have?
The Variable UHomeLoan is a basic variable home loan with no application or administration fees and has a low variable interest rate. It’s main drawback is that it has no offset account, however it’s a good choice if you don’t have much money sitting in your cheque account.
The Fixed UHomeLoan offers a fixed rate for up to 5 years and automatic rate lock for a fee. Fixed interest rates change most months depending on the cost of funds and in some cases UBank has great fixed rates, but most of the time another lender has a special offer which has a lower rate.
Tips for applying with UBank
The key to getting a fast and simple approval is to provide all of your documents in one go!
If you give 9 out of 10 of the documents that they need then your loan application will sit on hold until you provide that last document. If your payslips or loan statements are more than 6 weeks old then this will also delay your application.
Provide exactly what is needed in one go and you should have no problems.
Use UBank’s Uhomeloan document checklist to prepare for your home loan application.
Note: This is the latest home loan checklist effective December 2020. Please refer to UBank for their most up-to-date document requirements.
Compare UBank 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.