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Digital lender UBank has launched a 10 per cent deposit home loan with no lenders mortgage insurance (LMI) that lets borrowers take out loans up to $2 million for 90 per cent LVR.
Owner-occupiers and property investors can access the Flex and Neat home loan, which offers principal and interest (P&I) repayments.
UBank said that borrowers with around $60,000 and a PAYG income of $125,000 may be able to purchase property worth up to $450,000.
The low-deposit loan is aimed at giving younger buyers more flexibility to enter the market sooner, while giving investors earlier access to their next property purchase.
UBank claimed the gap between a traditional 20 per cent deposit and its 10 per cent deposit home loan could mean borrowers save up to $175,000 upfront.
George Srbinovski, head of broker distribution at UBank, told Broker Daily that the lender launched the product after seeing more challenges among young Australians trying to buy property.
“This product is great for people looking to buy their first home for a limited deposit. Also, let’s not forget it’s not restricted to professionals. Some high LVR products are restricted to professionals. Our products are available for everyone, as long as they meet our credit criteria,” Srbinovski said.
Srbinovski noted that brokers wanted more lending options to support first-time buyers to get on the property ladder.
“A lot of brokers were thinking around how they can speak to their current list of clients and to try and help Australians get into the property market, whether it is for purchasing their unoccupied home, or for reinvesting, or borderless investing,” Srbinovski said.
“Brokers were very much thinking about how this product would help them serve more customers.”
UBank chief home lending officer, Ray Jokhan, said the new 10 per cent deposit would help customers build equity.
“As they build equity and their loan-to-value ratio drops below 80 per cent, they become eligible for better rates – and we regularly review those with them,” Jokhan said.
Focus is on ‘where the customer wants to shop’
Speaking to Broker Daily about whether UBank was focused on growing broker flows or proprietary lending (as parent company National Australia Bank is doing), Srbinovski stressed both were important to customers.
“Really, for us, it’s where the customer wants to shop with Ubank,” Srbinovski said.
“So if the customer wants to deal with Ubank online, we have a solution. If they want to deal with one of our bankers, we have a solution. Or if they want to deal with one of our amazing brokers, we have a solution to that too.
“We’ve done a significant amount of investment to the broker channel to underwrite home loans a lot quicker, so they can serve more customers and give them great customer service.”
[Related: UBank appoints new CEO]
