Neobank 86 400 waives LMI for borrowers with 15% deposit for home loans
Online lender 86 400 has launched a new offering to make buying a home easier.
Neobank has introduced a new 85% Loan to Value Ratio (LVR) level for owner-occupiers who make principal and interest repayments, and has dispensed with lender mortgage insurance (LMI).
Typically, borrowers have to pay LMI when they have a deposit of less than 20%, which can add thousands to the upfront cost of buying a home.
The interest rates for the 85% LVR loan start at 2.04% pa for a one-year fixed interest rate for the home loan (comparative rate 2.96% pa *) and 2.54% pa for the variable rate home loan “Neat” (comparative interest rate) 2.55% pa *).
The main difference is that the ‘Own’ line comes with an offset account as well as some other features.
UBank also has a “No LMI” feature for their 85% LVR home loan, with both brands being NAB subsidiaries.
Borrowers can now apply for a 86,400 home loan directly instead of through a mortgage broker.
The table below shows how much 86,400 customers could save by not paying an LMI when buying a mid-value property in each capital city when they had a 15% down payment.
Source: 86 400
The lender also cut rates on a number of home and home loans by up to 25 basis points.
Some of the changes include:
- For borrowers with an LVR of 80%, the “own” three-year home loan rate with a fixed interest rate was reduced by 14 basis points to 1.85% pa (comparative rate 2.55% pa *).
- For borrowers with an LVR of 60%, the variable home loan rate “Neat” was reduced by 10 basis points to 2.09% pa (2.10% pa comparative rate *).
Travis Tyler, chief product & marketing officer at 86,400, said not using LMI could save thousands of dollars in the potential cost of a property.
“We know how difficult it can be to break into the housing market and get ahead with your loan, so we help home buyers get on the fast financial trail with smaller deposits or equity and very competitive interest rates,” said Tyler.
The new 86 400 can be used in conjunction with its $ 2,000 cashback offering, available through September 30th for purchases and refinances of at least $ 250,000.
Dubbed “Australia’s First Smart Bank,” borrowers in 86,400 states can apply online in just 15 minutes and get approval within 24 hours.
The lender first launched home loans in November 2019 and is currently paying $ 775 million in mortgages and is awaiting settlement.