While other lenders struggle with long turnaround times and clunky approval processes, fintech Nano has launched a new home loan where loan approval is granted on the spot. What’s the catch?
The new home loan is offered by Nano, which is “not a traditional lender,” co-founder Andrew Walker told Finder.
“It is a financial technology company that uses advanced data and innovative digital technologies to provide consumers with better financial services,” he explains.
Nano’s first home loan product comes with a very competitive variable interest rate of 2.19%. Basically, its streamlined online mortgage process promises application approvals in just minutes — not weeks or months, with some lenders currently mired in backlogs — by delivering a completely digital, paperless experience.
“Nano digitally approves home loan applications in minutes, not months…We use state-of-the-art technology to assess applicants’ financial transaction history data to create a risk profile and assess the ability to manage a home loan. [immediately]“Walker confirms.
“This means that, unlike traditional lenders, Nano does not require applicants to fill out lengthy application forms, upload payslips or provide statements for 12 months. Nano provides an intuitive and intelligent digital experience.”
It almost sounds too good to be true. In a hot real estate market environment, where loans take anywhere from days to months to process, I had to ask myself – how do they pull off such a feat?
How to Get Immediate Approval for a Home Loan
Traditionally, borrowers wait anywhere from a few days to a few months for the bank to process their documents and provide conditional home loan approval.
Nano circumvents this clumsy process by introducing a handful of criteria applicants must meet. This basically means that this loan is only available to the lowest risk customers in the market.
“In this initial phase, Nano begins by refinancing home loans to savvy, low-risk, digitally-engaged customers,” says Walker, who co-founded Nano with another former Big Four bank executive, Chris Lumby.
“Product offerings and eligibility criteria will be expanded in the future, but current criteria mean applicants must have an LVR of 75% or less, and a minimum family income of $150,000 or more, with at least minus $100,000 from a Pay As You Go (PAYG) source.”
In a nutshell, this means you need the following to qualify:
- An existing home loan. This mortgage is only available for refinancing, rather than for new customers. This is likely because refinancers have proven credit histories and demonstrate that they can handle the financial responsibilities of servicing a mortgage.
- A loan to value ratio (LVR) not exceeding 75%. Your LVR reflects how much of the property you own versus how much debt you have. On an $800,000 property, an LVR of 75% means you have a loan of $600,000 (75%) and a net worth of $200,000 (25%).
- A PAYG income. If you are self-employed or working as a contractor, you will need to purchase this property in conjunction with someone else who earns a regular income of at least $100,000, with a full-time job. Indeed, full-time employment is considered more stable than contracting out or self-employment.
- A clean credit history. It goes without saying that to be approved for this type of low-risk loan, you must have a clean credit history.
There are a few hurdles to jump through, but if you meet the criteria, you could qualify for a home loan that you can apply for through your smartphone, get immediate approval, and pay an ongoing low interest rate.
“Nano has removed the high loan servicing costs that come with outdated processes and legacy systems used by other lenders, and we pass that directly on to the customer through our low, competitive pricing,” Walker told Finder.
“The loan comes with a clearing sub-account, which is linked to a Nano Visa debit card and the Nano app that customers can use to spend, pay and store money, all at no cost. This account is tied to the customer’s home loan and helps reduce interest charged by “offsetting” the outstanding loan balance against the amount in your clearing account, allowing customers to better manage their money.”
Prospective borrowers can sign up for priority access to Nano before the full launch.
You do not meet the criteria for the new Nano mortgage loan? Check out other cheap home loans with ultra-low interest rates, for refinance and homebuyers – including great deals for those with low deposits.