Commonwealth Bank of Australia offers a digital home loan called Unloan for young buyers. This is Australia’s first digital home loan with a discount that increases every year up to 30 years!
According to their website, Unloan is a home loan that is simple to understand and easier to live with.
In this article, we will tell you all you need to know about this intriguing Unloan and how a mortgage broker in Brisbane can help you get the best deal.
Let’s dive in
What Is Unloan?
Unloan is CommBank’s newest home loan offer. Launched in 2022, it is a digital home loan that is built with modern technology, and the entire process is online.
According to Unloan’s CEO, the loan is intended to be easier to get, easier to understand and easier to live with. It is a home loan that can provide tech-savvy homeowners with a fast and simple alternative to traditional mortgages.
The application process is estimated to take only 10 minutes online! Unloan does not charge any fees. So you save on application fees, account-keeping costs, transaction fees and discharge fees.
However, the best part of Unloan is its extremely competitive interest rates. Owner-occupiers can enjoy a low variable rate of 5.99%, while investors can access a slightly higher interest rate of 6.29%.
The icing on the cake is that both owner-occupiers and investors get a loyalty discount of 0.01% every year for up to 30 years and a 0.3% discount in year 30!
Unloan also offers its customers the ability to make automated repayments at whatever frequency they desire (e.g. weekly, fortnightly or monthly). However, you can only make principal and interest repayments. Unloan does not offer interest-only repayments.
Unloan works best for new or refinancing homeowners who want a cost-effective loan that they can easily manage online – provided the amount does not exceed $10 million and 80% LVR.
What Makes Unloan Unique?
Unloan has some very unique selling points, and the 2 top ones are:
- It is completely online:
- This is a huge thing for a traditional bank like Commbank to offer a loan product that is 100% online, with an application process that is designed to be completed in 10 minutes.
- It is the first home loan with an increasing discount.
- This home loan has been designed to save borrowers the headache of having to refinance every year in search of better interest rates.
How To Apply For An Unloan Home Loan?
Before getting started with an Unloan application, you might want to read our step-by-step loan application process to get some general tips on what the process is like.
What are the eligibility criteria for Unloan?
To be eligible for Commbank’s Unloan, you have to meet the following criteria:
- Be at least 18 years old.
- Have an Australian passport, or alternately, an Australian state/territory driver’s license.
- Have a credit history that meets Unloan’s policies. If there are issues with your credit history, we suggest you take steps to fix those issues before applying for Unloan.
- Your income must be stable, and you should be able to prove that you can meet your loan repayments.
- You are refinancing an existing home loan up to 80% LVR.
- You have enough money to cover upfront costs, such as state mortgage registration fees.
You can also qualify for an Unloan home loan even if you earn a PAYG or are self-employed.
What documents do I need to provide?
To apply for Commbank’s Unloan, you have to submit these documents:
- Proof of Identification for each person (if it is a joint loan), i.e. driver’s license or passport
- A valid email address and other contact details
- Proof of income such as payslips. If you have other sources of income, such as rental income, you can also add this to your application.
- If you are self-employed, you will need your last 6 months of personal bank statements showing that you have been receiving a regular salary from your business.
- Statement of liability showing your other existing loans
- Details of your current home loan
How does the Unloan application work?
The application for Unloan is pretty simple. All you have to do is follow these steps:
- Download the app. (Remember Unloan has its own separate app from CommBank’s main app. You cannot apply for Unloan using the regular Commbank App)
- Add your property
- Add your details. If it is a joint application, add the details of the other borrowers.
- Add all your income (salary, rental income, government income, child support, etc.)
- Add your expenses
- Add your liabilities, e.g. existing home loans, credit cards and car loans.
- Set up your loan
- Verify your identity. Unloan uses facial recognition software to verify your identity.
- Upload all the required documents.
Congratulations! You have just completed an Unloan application.
What Interest Rates Does Unloan Offer?
Unloan offers the following interest rates:
Refinance: 5.99% for owner occupiers and 6.29% for investors
Buying a home with 80% LVR: 5.99% for owner occupiers and 6.29% for investors
Buying a home with more than 80% LVR: 6.29% for owner occupiers and 6.59% for investors.
Advantages Of Unloan
There are many advantages to Unloan, including:
- Unloan is simple and fast, with an online application process that takes as little as 10 minutes to complete.
- There is no need to fill in endless paperwork and go to the bank.
- Unloan is also looking into offering approvals in as little as 10 minutes for the future. Their goal is — apply in 10 minutes to get approved in just under 10 minutes.
- Unloan allows you to make extra repayments to pay off your loan faster. It also offers unlimited redraws on those extra payments.
- If you are approved for a loan, you will get a discount of 0.01% every year for up to 30 years. Since interest rates are rising, this discount may save you thousands of dollars and the hassle of having to continuously refinance to get the best rate.
- You can use AutoPay to change the date, amount and how often you make payments. With Unloan, you can make weekly, fortnightly or monthly repayments.
- If you have a joint loan, Unloan gives you access to joint-account approvals to make sure each person consents to any changes to the loan.
- Unloan used to be available only for those who want to refinance, but it is now available if you want to buy a home.
And the best bit? There are absolutely no fees attached to Unloan. That means:
- No application fees.
- No transaction fees.
- No account-keeping fees.
- No discharge fees.
- No change fees
- No late payment penalties
- No early termination penalties
- No redraw penalties
Disadvantages Of Unloan
There are a couple of major disadvantages to using Unloan, including:
- Unloan does not offer interest-only repayments. So, if you are an investor, you will have to make sure you have enough for both principal and interest repayments.
- The property valuation is automated, which means there is a risk that your property may be undervalued, reducing the amount you can borrow. Automated valuations are usually difficult, if not impossible, to dispute.
- Despite being a CommBank loan, Unloan has its own separate app. So, if you already have a Commbank account, you cannot manage your Unloan using the CommBank app.
Read more: How to challenge a bank valuation.
Bonus: Frequently Asked Questions
Unloan will digitally assess the value of your property using CommBank's automated property valuation technology. It is all 100% online.
Absolutely! One of the best features of Unloan is that you can make extra repayments on your loan. Unloan does not charge penalties on extra repayments. However, some Terms and Conditions may apply, so it is better to talk to your mortgage broker to make sure there are no caveats.
Unloan offers an unlimited redraw facility to allow you access to whatever extra repayments you have made on your loan. According to Unloan, there is no minimum or maximum on the number of redraw transactions you can make, and you don't need any paperwork or forms.
Important: Unloan repayments are processed monthly. So, if you make weekly or fortnightly payments, the payments made before the due date will appear as available for redraw. So before withdrawing any money, you must ensure you have enough in the account to meet the next monthly repayment.
Unloan is not available on the CommBank app. Additionally, you cannot get an Unloan service at CommBank branches or call centres. So even though Unloan is a product of CommBank, it is managed entirely separately from the rest of CommBank.
If you encounter a problem, you can send a text message or call +61 488 844 877, or you can email [email protected]. An Unloan lending specialist will respond to your query.
BONUS: Which Home Loan Features Do I Need?
It’s not easy to find out which features are truly important and which are just added bonuses. Here is a simplified list of home loan features and their advantages.
- Extra repayments: This feature allows you to contribute more towards your mortgage every month or make a lump sum payment and thereby allows you to reduce the principal amount on your loan. By doing so, not only will you save money in the long run, but you’ll decrease the overall interest you’ll pay. So this is a feature you truly need.
- Redraw facility: It’s a Homeloan feature that allows you to access the extra payments you’ve made on your mortgage when you are in need. It allows you to reduce the interest on your payments while keeping the funds ready and available in emergencies or for a specific goal, such as vacation or a new car.
- Offset account: it’s a transactional account that is directly linked to your home loan. Utilizing an offset account can lead to substantial long-term interest savings on your home loan. An offset account provides many more advantages compared to a redraw. When using a redraw facility, accessing your funds may involve additional steps and requirements. In contrast, an offset account functions like a regular transactional account, ensuring your money is ready and available when and if needed.
- Split home loan: This is a distinctive Homeloan feature that allows you to divide your mortgage into multiple accounts. It is often split into two parts— a fixed and a variable portion. The fixed-rate portion of your loan ensures that a part of your home loan repayment remains constant regardless of the market fluctuations. The variable portion of your loan provides an opportunity for you to take advantage of potential decreases in interest rates.
BONUS: Reasons Why Your Home Loan May Be Declined
Non-disclosure.
As technology becomes more pervasive, telling white lies on your application only gets harder.
When we met Steve, he was looking to buy a property and told us he was single, buying a home on his own. We completed our checks and did everything we normally do, reviewing transactions and checking for any irregularities. Steve’s application was clean, everything was straightforward, having a great deposit, long-term employment, and strong serviceability. Everything he declared matched up nicely with the information he provided.
When we submitted his application, we put Steve down as single, just as he declared, and more importantly, there was no information we found to say otherwise. Days later, the bank replied with the decline. The assessor picked up the phone and told us that she had completed a quick Facebook search, finding that Steve was not, in fact, single, having recently proposed to his long-term girlfriend. The bank has no boundaries when it comes to getting information. So, the easiest way to avoid non-disclosure is to simply declare the situation in full and unabridged
Joke Transactions
We get it. It’s a guilty pleasure transferring money to a mate with a nefarious description, whether it’s money for bail or an explicit drug. You have a little giggle. Who really reads these transaction statements anyway? Well, to you and me, it’s obviously a joke, but for the bank, it’s a different story. In recent years, banks have come under increased scrutiny from AUSTRAC, the regulator for preventing and detecting criminal abuse in the financial system.
With the banks leaning more and more on technology to report dubious transactions and penalties for failing to do so so significant, it’s likely your joke transactions are being flagged by to the regulator and, more importantly, having an impact on your home loan application, leaving a high chance for the bank’s algorithm to make an unfavourable decision on your application. So, at best, these joke transactions will be questioned by an assessor, and worse, it could mean a decline to your application.
Savings History
Years ago, a bank assessed Sheri’s application, who was one of our customers. Each month, she’d receive her salary in her everyday account, where she’d automatically transfer four thousand dollars to her savings account. Her salary and savings account were two separate accounts. Sheri was buying a home for $ 365,000. When the bank’s assessor picked up her application and reviewed it, they asked us to explain where this $4,000 that was mysteriously hitting her savings account each month was coming from. Without looking at Sheri’s salary account, one could be forgiven for asking this question. As you can imagine, the assessor was quite embarrassed when we pointed out that the money was coming from Sheri’s salary and that it could be found by looking at the salary account we had sent them. Needless to say, the assessor very promptly approved our loan, and there is a lesson for us to learn here.
The general rule of thumb is that any transaction over 1% of the purchase price must be explained to the bank.
Next Steps And Getting Your Home Loan
Are you looking to refinance? Or do you want to apply for your first home loan? Our team at Hunter Galloway is here to help you buy a home in Australia. Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.
If you want to get started, please call on 1300 088 065 or book a free assessment online to see how we can help.
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