New way to borrow has big banks on notice

New way to borrow has banks on notice content

2021 is shaping up as the year of the online lender, with record low rates driving borrowers away from the big banks and a whopping six in ten borrowers in Australia now considering online lenders instead.

The big banks have long held the lion’s share of the lending market, but a recent Mozo survey of 1,266 borrowers* suggests that’s about to change. For those considering online lenders, cheap interest rates are seen as the biggest benefit, along with lower fees, easy application processes and faster loan approvals.

With interest rates from top online lenders like UBank, loans.com.au and Athena dropping to crazy new lows, the savings on offer are substantial. On a typical $400,000 home loan, borrowers could save $4,024 a year by going with an online lender over a big bank.

Whether you’re looking to save money by refinancing, buy a new property, or get an investment loan, there’s an online lender to suit. Here are the Mozo money editor's picks of some of the best right now...

BANK BEATING HOME LOANS

loans.com.au Smart Booster Home Loan
loans.com.au
  • 1.85% discounted variable rate for 2 years

  • Rolls over to low ongoing 2.25% (2.21% comparison rate*)

  • Optional offset account plus free redraws and extra repayments

Our verdict

Aussie owned loans.com.au has been taking on the banks with low rate online loans since 2011, and this headline-stealing home loan is really getting borrowers switching. Winner of a Mozo Experts Choice Award for Best Low Cost Home Loan 2021, the Smart Booster Home Loan is designed to help you boost your savings and get mortgage-free faster. Flexible features include unlimited free extra repayments, free redraw and an optional offset account for 0.10%. There are no ongoing fees and its available to borrowers with a 20% deposit for loans of up to $1 million.

Where do I get it? Head over to loans.com.au to find out more >>

Athena Celebrate Variable Home Loan
Athena
  • 1.99% variable rate (1.99% comparison rate*)

  • Zero Athena fees + free extra repayments and redraw

  • Available to borrowers with 40% deposit or equity

Our verdict

Online lender Athena is on a mission to save borrowers money on their mortgage, with some of the lowest rates in town. The fee-free Athena Celebrate Variable Home Loan offers the same great rates to both new and existing borrowers, and as an added reward your rate will drop lower as you pay down your home loan. It's available to refinancers and new borrowers purchasing in capital or major regional cities. Minimum LVR 60%.

Where do I get it? Head over to Athena to find out more >>

Macquarie Offset Home Loan
Macquarie
  • Variable rates from just 2.14% (2.42% comparison rate*) - minimum 40% deposit

  • Up to 10 offset accounts per loan account available

  • Free extra repayments and redraw

Our verdict

Macquarie is all about using smart online technology to make the process of applying for, and managing, your home loan a breeze. This competitive Offset Home Loan lets you create up to 10 offset accounts to help pay off your home loan faster, with the added benefit of fee-free ATM access. You can also use Macquarie's state-of-the-art app to manage your accounts in one place. There's an annual package fee of $248 and this rate is available to borrowers with a minimum 70% LVR.

Where do I get it? Head over to Macquarie to find out more >>

UBank UHomeLoan
UBank
  • 1.85% fixed rate for 3 years (2.13% comparison rate*)

  • No ongoing fees + free extra repayments up to $20,000 during fixed term

  • Mozo Experts Choice Award 2021 - Best Fixed Rate Home Loan

Our verdict

As one of Australia's top-rated online banks, UBank has our seal of approval when it comes to bringing Aussies top value on their home loans. Borrowers looking to lock in while rates are low can snap up this stellar 3-year fixed home loan now. It's available to owner occupiers with 20% deposit for loans of up to $2 million, and while there is an initial $395 application fee there are no other fees to worry about. UBank even lets customers make extra repayments of up to $20k during the fixed term, for free!

Where do I get it? Head over to UBank to find out more >>

Nano Variable Home Loan
Nano
  • 1.99% variable and comparison rate* (refinancers only)

  • Zero upfront or ongoing service fees

  • Free 100% offset sub account

Our verdict

Looking for a home loan that could save you thousands without having to sacrifice flexible features like an offset account and redraw facility? Look no further than this refinance home loan from competitive new digital lender Nano. This home loan ticks all the boxes, with an ultra low rate for refinancers with a 75% LVR plus unlimited additional repayments, free redraw, free 100% offset account, and a simple online application that makes it easy to apply.

Where do I get it? Head over to Nano to find out more >>

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for the amount and term you entered.

**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home loans Awards

Want to check out other borrowing options? Head over to our home loan comparison table, our personal loans comparison tool or our car loan comparisons to get the ball rolling.

* To read more about Mozo's online lender research, read our detailed report here.

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