Non-Bank Investment Lender of the Year
On top of the convenience, a smaller, more nimble online lender delivers low rates and speedy approval
The Covid-19 pandemic sent shockwaves through the global financial system, and non-bank lending is not immune. The Reserve Bank of Australia’s April Financial Stability Review highlighted the chance of “extensive” credit and liquidity risks for the non-bank sector.
However, these risks should be somewhat alleviated after the Australian Office of Financial Management (AOFM) was provided with a $15 billion investment capacity to buy (fund) loans from small and non-bank lenders over a 12-month period. It effectively ensures you have the opportunity to borrow through the pandemic.
Non-bank lenders consistently offer exceptionally low rates, typically lower than the big four, thanks to the nature of the cost savings associated with their digital models.
Tic:Toc offers a fixed three-year investment loan rate (principle and interest) of 2.52% and a variable rate of 2.90% (principle and interest).
Both options include free online redraw, and the option of an offset account for an extra $10 a month, with no upfront or ongoing fees.
“There has been a large gap in the market for a complete digital home loan experience,” says Anthony Baum, chief executive at Tic:Toc.
“While other financial products have transitioned online, Australians still expect the process of getting a home loan to be expensive, confusing and take weeks for approval. The demand for our fully digital home loan fulfilment experience has grown consistently over the last three years, and particularly so over the last few months with everyone working from home, and consumers becoming more confident about completing larger transactions online.”
The digital experience is defined not just by convenience, but also speed of approval. “The beauty of a digital lending process is that its scalable, so while larger lenders struggle to keep up with customer demand, we can maintain same-day or near-same-day approval on more cost-effective home loans.”
Tic:Toc plans to use artificial intelligence to further improve the customer experience. “We’re also using our customer-facing business as a way to test and validate our explainable artificial intelligence (XAI) technology to help the industry deliver more efficient and responsible lending solutions for their customers as well,” says Baum.
Last year’s winner, Freedom Lend, takes second place in 2020. At the time of writing it had fixed investment loans starting at 2.19%pa with a minimum investment of $50,000. However, if you’re chasing additional features like an offset and redraw account, the Freedom Variable loan starts from 2.49%pa.
Catapulting into third place this year is Adelaide Bank. For a fixed loan, investors are best checking out the bank’s SmartFix product where interest rates start at 2.59%pa and loan terms vary from one to five years. Its SmartFit variable investment loans start at 3.03%pa (principal and interest). Both products have free redraws online and through the app.