NAB’s ubank launched in 2008, marketing itself as Australia’s first homegrown digital bank and setting out to establish itself in the “self-directed” customer segment.
Ubank had steadily grown its customer base in both its deposits and lending segments before merging with neobank 86 400 in 2021. Since that time, ubank has streamlined its operations to two simple product lines: home lending and everyday banking.
It has also invested heavily in new technology and is continuing to roll out features and functionality targeted at younger Australians who prefer to do their banking online.
In FY24, ubank’s lending book was $13.5 billion, with the bank “consistently achieving between two- and five-times system credit growth”. (That's bank-speak for the rate of growth, rather than just its dollar value.)
Among home lenders, ubank is arguably best known for its policy of not charging lenders mortgage insurance (LMI) to owner occupier borrowers with a deposit or equity as low as 15%, but more on that soon.
Let’s look at some of ubank’s key home loans and features.
What home loans does ubank offer?
Ubank’s home loans fall under three banners:
Neat variable
Neat variable home loans are ubank’s basic home loan product with no frills and no annual fee. The loans come with a fee-free redraw facility where any extra funds paid into the loan can be withdrawn at any time.
Flex variable
Flex variable loans come with 100% interest offset across multiple ubank Spend, Bills, and Save accounts. They also allow borrowers to split their loan with a Flex fixed home loan. Flex variable home loans come with an annual fee of $250.
Flex fixed
Flex fixed home loans allow borrowers to lock in a rate for up to five years and make an additional $20,000 in payments during the fixed term at no charge. They also allow free redraw of up to $20,000 in additional loan funds held within the loan, up to the maximum available balance or $20,000 (whichever is greater). Flex fixed home loans also come with an annual fee of $250.
Compare ubank mortgage rates
Check out some of ubank’s home loan offerings in the table below.
ubank’s no-LMI policy for lower deposit loans
As mentioned earlier, unlike the vast majority of lenders, ubank doesn’t charge lenders' mortgage insurance (LMI) to owner occupier borrowers making principal and interest (P&I) payments with a deposit or equity as low as 15%.
LMI, a one-off insurance policy to cover lenders, is widely charged on loans with loan-to-value ratios (LVR) of 80% or more - or less than 20% deposit or equity. The insurance is calculated on the size of the loan and can add tens of thousands of dollars to the cost of a home loan.
See also: Lenders Mortgage Insurance calculator
Ubank waives LMI on home loans up to 85% LVR, a policy designed to help its target market of young Australians get into the property market sooner.
Ubank’s chief home lending officer Kanishka Raja said the feature is very popular among younger borrowers.
“It’s very much directed at those Gen Z and Millennial customers who are looking to get on the property ladder,” he said.
“They have good jobs. They have good salaries coming in, but they may not have the savings yet to get a full 20% deposit. What this product allows you to do is to come in with a 15% deposit, and not have to pay lenders mortgage insurance.”
Although interest rates are higher than for loans with 80% LVR, Mr Raja said the policy allowed borrowers to get into the market then renegotiate to a lower interest rate once equity in their property had risen above the 20% benchmark.
See also: Savings.com.au Home Equity Calculator
Ubank home loan tech
Ubank has won Australian Mortgage Awards' ‘Fintech Lender of the Year’ for four years as a row (as at October 2024) and it’s still investing in its technology.
One of the standout tech features within its app is the ability for borrowers to connect their accounts held at other financial institutions, so all their banking is visible in one place.
In the home lending space, ubank continues to roll out technology to streamline its application review process, aiming to approve most of its home loan applications within two days without the need for back and forth with customers.
Mr Raja said ubank’s App Tracker technology also allows customers to track the progress of their home loan applications from submission through to settlement.
“When our customers previously submitted a home loan application, they had minimal visibility on the status of their application and would have to call us for an update,” he said.
“App Tracker allows customers to check the status of their loan, see if there are any actions or tasks they need to complete, and receive timely information in the lead up to settlement.”
Ubank is continuing to revamp its fully digital loan application process for both retail customers and its mortgage broker channel.
Refinance applications were the first to go through a simplified loan application process, generally taking around 20 minutes.
As of October 2024, it was being rolled out for other application types, including new purchases and loan pre-approvals.
Why choose a ubank home loan?
Products
Ubank’s home lending products are designed to be simple and straightforward. They feature competitive interest rates and ubank’s loans with annual fees are at the lower end of annual fees charged by other banks and lenders.
No LMI on up to 85% LVR
A major drawcard in applying for a home loan with ubank is its policy of waiving lenders mortgage insurance (LMI) for borrowers with 15% deposit for new purchases, or 15% equity for refinancers.
Although the interest rate charged for 85% LVR loans are a step up from ubank’s LVR 80% and under rates, some borrowers could save a substantial sum by avoiding LMI and switching to a better interest rate when they build equity in their loan to 20% or more.
It also encourages younger borrowers to get a foothold in the property market sooner than having them wait to save the standard 20% deposit which can be difficult to do in a fast-rising property market. This, in turn, can help them reap the benefits of a rising market, allowing them to build up equity in their property sooner, giving them the opportunity to refinance their loan to a better rate or borrow against it for investment purposes.
Technology
Around a quarter of ubank’s workforce are technologists who have the advantage of not having to deal with any legacy systems.
The bank prides itself on its digital experience with ubank’s analytics going a step further than many other banking apps by providing insight into customers' income, spending, bills, and bill-paying.
Ubank says it’s all part of its stated mission: to help more Australians be successful with money.
Its ‘Connected Accounts’ feature that allows users to see their bank accounts with other institutions in one place saw many customers switching to conduct the bulk of their banking with ubank, rather than using it as their ‘rainy day’ account.
During 2024, ubank rolled out new a suite of new app features and functionality including Pay Cycle, EOFY interest statements, Bills planner, Spotted Bills, a separate Bills account, and low balance alerts aimed helping its cohort of younger customers better manage their bills and committed expenses.
NAB-backed
For borrowers nervous about taking out a loan with a smaller lender, ubank is a division of one of Australia’s big four National Australia Bank.
As such, it has the backing of a big player but without the red tape and legacy processes that can sometimes come with them.
Turnaround time
Ubank’s home loan turnaround time is already averaging less than four days, thanks to the rollout of new features in its origination and processing tech. It’s aiming to get that down to two days (for most loans) as its rollout continues.
Very few lenders can compete with that.
How to apply for a ubank home loan
To apply for a home loan, you must meet ubank’s lending criteria. An applicant needs to:
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be 18 years of age or older
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be an Australian or New Zealand citizen, or apermanent resident of Australia
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live in Australia
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be employed on a permanent, casual, or contract basis (ubank doesn’t lend to self-employed people)
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have a good credit rating (ubank will run the report on check your credentials)
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be listed on the property title
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be applying either individually, or jointly with a spouse or de facto partner who they currently live with or intend to live with after settlement in the same household (meaning you won’t be able to apply with a sibling or parent)
Since ubank is an online-only lender, you can apply for a mortgage via its website, or via a local accredited broker.
Documents needed
Applying for a home loan will require you to submit certain documents such as:
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Proof of identity validating your name, address and birth date. This can be your passport, Medicare card, driver’s license, etc.
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Details of your ongoing monthly expenses such as food expenses, childcare, clothing, transport, etc.
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Saving accounts statements
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Proof of ongoing rent or board
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Assets and liability documents
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For employees, ubank will typically require two recent payslips and your most recent payment summary or tax return
ubank frequently asked questions
How long does it take for UBank to process my home loan application?
A ubank online application can be done in 20 minutes, or for applications assisted by a ubank lending specialist, the call can take up to an hour.
Approval generally takes up to five business days unless there is a need for any additional information. Ubank is working to reduce this turnaround time for most home loan applications.
How does UBank verify my identity?
Ubank can verify your identity electronically using the personal details you have provided in your application.
Why was my home loan application unsuccessful?
Your home loan application can be unsuccessful if you don't meet the eligibility criteria, including any credit requirements, or haven't supplied all the documentation required for the process to move forward.
Original article by Aaron Bell in January 2022. Updated on 14 October 2024 by Denise Raward.
Image by Toa Heftiba via Unsplash
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