86 400 Lender Review - Are Their Home Loans The Right Fit For You?

With a name like 86 400, you’re forgiven for being confused about who they are and what they do. 86 400 is an Australian neobank offering home loans, savings, and transaction accounts. They’re backed by NAB, one of the “Big 4” Aussie banks. 86 400 promise their customers access to “smart banking” by leveraging technology. 

By operating completely online, 86 400 can save on overhead costs that other banks and lenders account for in their fees and pricing.  86 400 has positioned itself as a bank that offers value by dispensing with these overheads and stripping back to the bare essentials. They also use smart technology to help you keep on top of your finances, and to appeal to the modern customer.

In this article, we’ll explore what options 86 400 offers in the way of home loans. We’ll break down:

• Who are 86 400 and what they can offer you?
• What home loan products do they provide?
• Who is eligible for an 86 400 home loan?
• What is their home loan application process like?
• What are the pros and cons of 86 400 home loans?

If you’re in the market for a home loan and are looking at what 86 400 can provide, then this is the article for you.

Who Are 86 400 And What Do They Offer? 

86 400 is a neobank, which is a bank that solely delivers services via digital means, usually through smartphone apps. The premise behind this type of banking is:

1. Convenience - You can do your banking on the go, on your smartphone at any time that suits you.
2. Cost efficiency -  Having an online-only presence saves on overhead costs such as shopfront leasing, fit-outs, and front-of-house staffing. These savings, in turn, flow onto the customer by keeping fees and interest rates at a competitive level.
3. Leveraging technology - With a focus on using the latest smart tech, big data, and artificial intelligence, their apps can offer more features than those provided by traditional banks.  

The name 86 400 stems from their credo, that they want you to feel in control of your money all 86 400 seconds of every day. They aim to achieve this by offering smart tech embedded in their app which provides:

• Auto predictions for upcoming bills, payments, and subscription services.
• You’ll be able to get an overview of your financial profile, look at past financial history, and have more insight to plan ahead.
• The ability to connect with 150 financial institutions to provide read-only updates on other bank accounts, credit cards, and loan balances. 
• Insights into your home loan to help you pay it off quicker. 
• Compatibility with mobile payment options such as Apple Pay, Google Pay, and Samsung Pay, to name a few.

86 400 offers standard traditional financial products such as savings and transaction accounts and home loans. In fact, 86 400 were the first neobank in Australia to offer home loans. Their Head of Lending, who developed their home loan products, has extensive experience in the finance industry with past employment at Westpac, Virgin Money, and St George.

86 400 launched in September 2019. As a new kid on the block, borrowers can have reservations about the guarantees and protections surrounding their funds. 86 400 have a full banking license and are now owned by NAB. Having a banking license ensures that customer deposits are guaranteed by the Government for up to $250,000.

What Types Of Home Loans Do 86 400 Provide?

Currently, 86 400 offers 2 types of home loan products for both owner-occupied buyers and property investors:

• Neat - available as a variable loan.
• Own - available as a fixed-rate loan and variable loan.

Let’s explore their features and benefits.

Neat Home Loan

• One of the most attractive features of this loan is that there are no ongoing fees.
• You’ll be able to make free unlimited additional repayments on your loan, which means you can potentially pay it off faster.
• You’ll have access to your additional payments via their redraw facility.
• Interest rates are competitive and are lower for those with a bigger deposit.

Own Home Loan - Variable

• You’ll be able to make free unlimited additional repayments.
• You’ll have access to your additional payments via their redraw facility.
• You’ll be able to offset accounts, which can lower the amount of interest you pay.
• There are different interest rates available for owner-occupied home buyers and investment buyers.
• There are ongoing fees with this loan.

Own Home Loan - Fixed Rate

• You’ll be able to make extra repayments for free, up to $20, 000 per fixed loan term.
• You’ll have access to your additional payments via their redraw facility.
• There are different interest rates for owner-occupied borrowers and investors.
• You’ll get the option to make interest-only repayments.
• You can lock in a rate 90 days from when you submit an application.
• There are ongoing fees with this loan.

If you can’t decide between the certainty of a fixed rate and the flexibility of a variable rate, you have the option of having a split rate home loan with the Own option.

With a deposit of 15%, 86 400 offers an 85% loan-to-value ratio (LVR) Neat and Own home loan option. The LVR is the percentage of the property value your loan equates to. With this option, they’ll dispense with the need to pay for Lenders Mortgage Insurance (LMI), which protects lenders from losses related to defaulted loan repayments.

Am I Eligible For A 86 400 Home Loan?

Before you can apply for an 86 400 home loan, you’ll need to meet the following criteria:

• You must be an Australian citizen or permanent resident.
• You’ll need to be 18+ years of age.
• Have a regular, stable pay-as-you-go (PAYG) income.
• Have saved 15% or more for a deposit.
• Are applying for a loan no greater than 85% LVR for owner-occupied home loans and 80% LVR for investors.
• Purchasing or refinancing a residential property only. You cannot buy vacant land or secure a building loan with 86 400.
• Have a maximum of 2 applicants for the home loan.
• Have a satisfactory credit rating and a healthy financial situation.

With these eligibility criteria, 86 400 loans will not be suitable for all borrowers. Anyone expecting to have a more complex home loan with non-traditional jobs and incomes will need to look elsewhere.

What Is The 86 400 Home Loan Application Process Like?

Applying for a loan with 86 400 can be a breeze when compared to other traditional lenders. This is because:

• They have quick turnaround times.
• 86 400 can pre-fill information if you’re an existing customer.
• They require little physical paperwork. No paperwork is needed for refinancing and when purchasing, they’ll just need the Contract of Sale.
• They can electronically verify your ID, income, living expenses, and credit history. There’s no need to hand over hard copies of your proof of income/payslips, expenses, loans, and credit card balances.
• They don’t offer low-doc home loans or assess more complex non-PAYG applicants. This allows for quick turnaround times and fewer documentation requirements.
• The 86 400 mortgage application process is fully online and streamlined. You can apply yourself, online or via their smartphone app. Or, you can apply via a mortgage broker, like YouBroker.
  Employing the services of a mortgage broker can give you plenty of additional advantages when applying for a loan. 86 400 used to defer the application process to the mortgage broker system. This was to ensure you received professional advice to assist you in applying for the right type of loan for your circumstances.

What Are The Pros And Cons Of A 86 400 Home Loan?

A home loan with a digital bank like 86 400 won’t be suitable for every mortgage applicant. Having a cloud-based, online and streamlined approach, and being new to the market can often mean they have fewer products to choose from and limited eligibility.

So, let’s break down the pros and cons of a mortgage with 86 400 to see if they’re potentially a good fit for you.

The Pros

• They operate digitally, which is cheaper to run and therefore, allows for savings to flow onto you. They have the ability to offer more favourable fees and lower rate home loans.
• A simple online application process.
• Quick assessment turnaround times given all information is provided.
• You can pay off your loan sooner with unlimited additional repayments for most home loan products.
• A redraw facility on all mortgage products.
• Offset eligible 86 400 accounts to save on interest paid for variable loans.
• Electronic sign-off is available for most of the paperwork (except for the mortgage).
• An 85% LVR option to dispense with the need to pay LMI with a deposit of 15%.
• An intuitive app to keep you up to date with your finances.

The Cons

• They don’t offer low doc loans, which means 86 400 is not suitable for casual and contract, or self-employed applicants.
• They don’t handle complex applications, which means they aren’t a good fit for those with past credit issues or non-traditional incomes.
• They only allow you to borrow a maximum of 85% LVR for owner-occupied loans, and 80% LVR for investment properties. So, you’ll need to save a good deposit before you apply.
• They’re not suitable for those who aren’t tech-savvy. With everything handled through a cloud-based smart app, you’ll need to be comfortable handling your banking completely online.
• If you like to pop into a brick-and-mortar branch and talk face-to-face with a human, then 86 400 is not ideal.
• They’re a new lender, and thus, don’t offer an extensive range of financial products, like lines of credit or bridging loans.
• Their criteria for eligibility make their loans unavailable to certain people, such as those looking to build.

Disclaimer: All the above information was accurate at the time of publication. Banks and lenders may change their financial product offerings or policies.

The Wrap Up

Dispensing with the traditional bank set up and operating in an online, cloud-based capacity can mean low fees and competitive interest rates for you.

If you’re in a good financial position, have stable PAYG employment, and will most likely have an uncomplicated application, then 86 400 may be worth looking into. But you’ll have to be the type of modern customer who likes the tech-savvy, non-brick-and-mortar approach.

However, if you’re self-employed, a freelancer, a casual, or a contractor, you will need to look elsewhere for your home loan needs. 86 400 won’t have the capacity to accommodate your application, which can be more complex.

Hopefully, this article has provided you with some helpful info and insight into 86 400 home loans. If you’d like to explore more information about property, finance, and lifestyle, you can find all You Broker’s articles here: https://youbroker.com.au/articles/

Next Steps

At YouBroker, we understand that comparing lenders and interest rates to find the best fit for you can be time-consuming and overwhelming. Particularly when you’re navigating the real estate buying process at the same time. 

YouBroker can help you with all of the above, and more. Whether you’re looking to purchase or refinance, we can help you to:

• Compare home loan products, interest rates, and deals across multiple banks and lenders,
• Calculate your savings, living expenses, and borrowing power, to give you insight into what loan amount you could be eligible for.
• Analyse what home loan products and lenders offer the right fit for your goals and needs, and
• Navigate the real estate buying or refinancing process.

At YouBroker, we’re dedicated to offering you the most convenient and speedy experience. All while maintaining an expert and thorough assessment of your individual needs.

We offer:

• Access to the best rates, deals, and cashbacks,
• Support and expert advice from our fully accredited, professional team,
• Quick approvals,
• Streamlined and convenient digital application process,
• A fully secure online platform, and 
• Digital updates via our online portal so you can stay informed through the whole process. 

If you’re looking to take the hassle out of the home loan application process, we’re ready to assist. Want to know more? Check us out here: https://youbroker.com.au/get-started