Home loans from non-bank lenders (variable rate)
The table below shows some of the lowest non-bank variable home loan rates from lenders on Money.com.au’s database.
Non-bank product | Pacific Mortgage Group Variable Home Loan |
|---|---|
Interest rate | 5.59% p.a. |
Comparison rate | 5.59% p.a. |
Max LVR | 80% |
Non-bank product | Virgin Money Lite Home Loan Variable |
Interest rate | 5.59% p.a. |
Comparison rate | 5.61% p.a. |
Max LVR | 60% |
Non-bank product | Mortgage House Chameleon – Executive Home Loan 60 |
Interest rate | 5.64% p.a. |
Comparison rate | 5.68% p.a. |
Max LVR | 60% |
Non-bank product | Freedom Lend FREEDOM VARIABLE |
Interest rate | 5.64% p.a. |
Comparison rate | 6.03% p.a. |
Max LVR | 60% |
Non-bank product | Unloan Refinance |
Interest rate | 5.69% p.a. |
Comparison rate | 5.60% p.a. |
Max LVR | 80% |
Non-bank product | Mortgage House Chameleon – Executive Home Loan 80 |
Interest rate | 5.69% p.a. |
Comparison rate | 5.73% p.a. |
Max LVR | 80% |
Non-bank product | Reduce Home Loans Eco Variable |
Interest rate | 5.69% p.a. |
Comparison rate | 5.75% p.a. |
Max LVR | 60% |
Non-bank product | Up Home Variable Rate Loan |
Interest rate | 5.70% p.a. |
Comparison rate | 5.70% p.a. |
Max LVR | 80% |
Non-bank product | Timely Home Owner-occupied (Basic) |
Interest rate | 5.70% p.a. |
Comparison rate | 5.71% p.a. |
Max LVR | 60% |
Non-bank product | Timely Home Owner-occupied (With Offset) |
Interest rate | 5.70% p.a. |
Comparison rate | 5.87% p.a. |
Max LVR | 60% |
Non-bank product | Homestar Finance Star Choice |
Interest rate | 5.74% p.a. |
Comparison rate | 5.74% p.a. |
Max LVR | 80% |
Non-bank product | Reduce Home Loans Basic Home Loan Variable |
Interest rate | 5.74% p.a. |
Comparison rate | 5.80% p.a. |
Max LVR | 80% |
Non-bank product | Loans.com.au Variable Bare Home Loan 90% LVR |
Interest rate | 5.79% p.a. |
Comparison rate | 5.83% p.a. |
Max LVR | 90% |
Non-bank product | Better Choice Gold Special Basic Variable Home Loan |
Interest rate | 5.80% p.a. |
Comparison rate | 5.83% p.a. |
Max LVR | 70% |
Non-bank product | Well Money Refinance Owner Occupied |
Interest rate | 5.81% p.a. |
Comparison rate | 5.85% p.a. |
Max LVR | 60% |
Non-bank product | Virgin Money Loaded Home Loan Variable Rate |
Interest rate | 5.84% p.a. |
Comparison rate | 6.13% p.a. |
Max LVR | 95% |
Non-bank product | Yard Home Loan |
Interest rate | 5.89% p.a. |
Comparison rate | 5.91% p.a. |
Max LVR | 80% |
| Non-bank product | Interest rate | Comparison rate | Max LVR |
|---|---|---|---|
Pacific Mortgage Group Variable Home Loan | 5.59% p.a. | 5.59% p.a. | 80% |
Virgin Money Lite Home Loan Variable | 5.59% p.a. | 5.61% p.a. | 60% |
Mortgage House Chameleon – Executive Home Loan 60 | 5.64% p.a. | 5.68% p.a. | 60% |
Freedom Lend FREEDOM VARIABLE | 5.64% p.a. | 6.03% p.a. | 60% |
Unloan Refinance | 5.69% p.a. | 5.60% p.a. | 80% |
Mortgage House Chameleon – Executive Home Loan 80 | 5.69% p.a. | 5.73% p.a. | 80% |
Reduce Home Loans Eco Variable | 5.69% p.a. | 5.75% p.a. | 60% |
Up Home Variable Rate Loan | 5.70% p.a. | 5.70% p.a. | 80% |
Timely Home Owner-occupied (Basic) | 5.70% p.a. | 5.71% p.a. | 60% |
Timely Home Owner-occupied (With Offset) | 5.70% p.a. | 5.87% p.a. | 60% |
Homestar Finance Star Choice | 5.74% p.a. | 5.74% p.a. | 80% |
Reduce Home Loans Basic Home Loan Variable | 5.74% p.a. | 5.80% p.a. | 80% |
Loans.com.au Variable Bare Home Loan 90% LVR | 5.79% p.a. | 5.83% p.a. | 90% |
Better Choice Gold Special Basic Variable Home Loan | 5.80% p.a. | 5.83% p.a. | 70% |
Well Money Refinance Owner Occupied | 5.81% p.a. | 5.85% p.a. | 60% |
Virgin Money Loaded Home Loan Variable Rate | 5.84% p.a. | 6.13% p.a. | 95% |
Yard Home Loan | 5.89% p.a. | 5.91% p.a. | 80% |
Home loans from non-bank lenders (fixed rate)
The table below shows some of the lowest non-bank fixed home loan rates from lenders on Money.com.au’s database.
Non-bank product | Pacific Mortgage Group Fixed Home Loan 1 Year |
|---|---|
Interest rate | 5.99% p.a. |
Comparison rate | 5.63% p.a. |
Max LVR | 80% |
Non-bank product | Pacific Mortgage Group Fixed Home Loan 2 Years |
Interest rate | 5.99% p.a. |
Comparison rate | 5.67% p.a. |
Max LVR | 80% |
Non-bank product | Pacific Mortgage Group Fixed Home Loan 3 Years |
Interest rate | 6.09% p.a. |
Comparison rate | 5.73% p.a. |
Max LVR | 80% |
Non-bank product | Virgin Money Loaded Home Loan Fixed Rate 2 years |
Interest rate | 6.24% p.a. |
Comparison rate | 6.21% p.a. |
Max LVR | 60% |
Non-bank product | Up Home Fixed Term 1 Year |
Interest rate | 6.35% p.a. |
Comparison rate | 5.77% p.a. |
Max LVR | 80% |
Non-bank product | Up Home Fixed Term 3 Years |
Interest rate | 6.35% p.a. |
Comparison rate | 5.88% p.a. |
Max LVR | 80% |
Non-bank product | Tiimely Home Owner-occupied – Principal & Interest Fixed 1 Year (Basic) |
Interest rate | 6.39% p.a. |
Comparison rate | 5.77% p.a. |
Max LVR | 60% |
Non-bank product | Tiimely Home Owner-occupied – Principal & Interest Fixed 3 Years (Basic) |
Interest rate | 6.39% p.a. |
Comparison rate | 5.90% p.a. |
Max LVR | 60% |
Non-bank product | Tiimely Home Owner-occupied – Principal & Interest Fixed 1 Year (With Offset) |
Interest rate | 6.39% p.a. |
Comparison rate | 5.94% p.a. |
Max LVR | 60% |
Non-bank product | Tiimely Home Owner-occupied – Principal & Interest Fixed 3 Years (With Offset) |
Interest rate | 6.39% p.a. |
Comparison rate | 6.06% p.a. |
Max LVR | 90% |
Non-bank product | Virgin Money Loaded Home Loan Fixed Rate 3 years |
Interest rate | 6.39% p.a. |
Comparison rate | 6.29% p.a. |
Max LVR | 60% |
Non-bank product | Up Up Home Fixed Term 2 years |
Interest rate | 6.40% p.a. |
Comparison rate | 5.84% p.a. |
Max LVR | 80% |
Non-bank product | Up Up Home Fixed Term 4 years |
Interest rate | 6.40% p.a. |
Comparison rate | 5.95% p.a. |
Max LVR | 80% |
Non-bank product | Up Up Home Fixed Term 5 years |
Interest rate | 6.40% p.a. |
Comparison rate | 6.00% p.a. |
Max LVR | 80% |
Non-bank product | Timely Home Owner-occupied - Principal & interest 3 years |
Interest rate | 6.44% p.a. |
Comparison rate | 5.92% p.a. |
Max LVR | 90% |
Non-bank product | Timely Home Owner-occupied - Principal & interest 4 years |
Interest rate | 6.44% p.a. |
Comparison rate | 6.03% p.a. |
Max LVR | 90% |
Non-bank product | Freedom Lend Freedom Fixed 1 year |
Interest rate | 6.44% p.a. |
Comparison rate | 6.08% p.a. |
Max LVR | 60% |
| Non-bank product | Interest rate | Comparison rate | Max LVR |
|---|---|---|---|
Pacific Mortgage Group Fixed Home Loan 1 Year | 5.99% p.a. | 5.63% p.a. | 80% |
Pacific Mortgage Group Fixed Home Loan 2 Years | 5.99% p.a. | 5.67% p.a. | 80% |
Pacific Mortgage Group Fixed Home Loan 3 Years | 6.09% p.a. | 5.73% p.a. | 80% |
Virgin Money Loaded Home Loan Fixed Rate 2 years | 6.24% p.a. | 6.21% p.a. | 60% |
Up Home Fixed Term 1 Year | 6.35% p.a. | 5.77% p.a. | 80% |
Up Home Fixed Term 3 Years | 6.35% p.a. | 5.88% p.a. | 80% |
Tiimely Home Owner-occupied – Principal & Interest Fixed 1 Year (Basic) | 6.39% p.a. | 5.77% p.a. | 60% |
Tiimely Home Owner-occupied – Principal & Interest Fixed 3 Years (Basic) | 6.39% p.a. | 5.90% p.a. | 60% |
Tiimely Home Owner-occupied – Principal & Interest Fixed 1 Year (With Offset) | 6.39% p.a. | 5.94% p.a. | 60% |
Tiimely Home Owner-occupied – Principal & Interest Fixed 3 Years (With Offset) | 6.39% p.a. | 6.06% p.a. | 90% |
Virgin Money Loaded Home Loan Fixed Rate 3 years | 6.39% p.a. | 6.29% p.a. | 60% |
Up Up Home Fixed Term 2 years | 6.40% p.a. | 5.84% p.a. | 80% |
Up Up Home Fixed Term 4 years | 6.40% p.a. | 5.95% p.a. | 80% |
Up Up Home Fixed Term 5 years | 6.40% p.a. | 6.00% p.a. | 80% |
Timely Home Owner-occupied - Principal & interest 3 years | 6.44% p.a. | 5.92% p.a. | 90% |
Timely Home Owner-occupied - Principal & interest 4 years | 6.44% p.a. | 6.03% p.a. | 90% |
Freedom Lend Freedom Fixed 1 year | 6.44% p.a. | 6.08% p.a. | 60% |
What is a non-bank home loan lender?
A non-bank lender is a provider that specialises exclusively in loans for homes, cars, or businesses and doesn’t offer any banking products like saving accounts or term deposits.
Non-bank lenders offer an effective alternative for borrowers who need a more specialist lending solution or more speed and flexibility when applying for a home loan..
To operate as a bank in Australia and accept deposits from customers, an institution must be an Authorised Deposit Taking Institution (ADI) regulated by the Australian Prudential Regulation Authority (APRA). By contrast, most non-bank lenders are Registered Financial Corporations (RFC) who can only offer specific types of loans.
While banks primarily use the money from customer deposits to fund their loans, non-bank lenders source funds for lending from investors looking to earn a return.
According to Katey Russo, a Money.com.au mortgage broker with four decades of industry experience, non-bank lenders are playing an increasingly important role in Australia’s mortgage market, particularly for borrowers who need a non-standard lending solution.
Who are non-bank home loans suited to?
Katey Russo, Mortgage Broker
“In my experience, non-bank lenders are suited to home loan applicants who prioritise speed and more flexible borrowing criteria than what the main bank lenders offer. There are also what are known as ‘non-conforming’ lenders who fill a space in the market for people who have complex, urgent or challenging circumstances and can’t access finance from mainstream lenders. In this instance, a non-bank home loan is sometimes just a stepping stone towards a more conventional long-term option.”
Katey Russo, Mortgage Broker
There are around 30 non-bank lenders in Money.com.au’s home loans database, compared to almost 90 banks.
3 types of non-bank home loan providers
Online-only non-bank lenders
Some non-bank lenders offer straightforward home loans to a mass market audience, but because they are exclusively online and have low operating costs, they aim to offer faster processing times and low rates.
- Athena Home Loans Athena is a non-bank home loan lender that offers unique features, including interest rates that automatically drop as the loan is paid down. It also offers the same interest rates to existing customers and new borrowers. It lends to owner occupiers, investors, self-employed individuals, companies and trusts.
- Firstmac / loans.com.au Firstmac is Australia’s largest family-owned lending company and specialises in simple, affordable and competitive home loans. Its subsidiary, Loans.com.au, was one of the nation’s first online lenders and promotes low rates, fast approvals and a seamless digital experience.
- Resimac / Homeloans.com.au Reismac is considered to be one of the original non-bank lenders and is publicly listed on the ASX. It’s a parent company to Homeloans.com.au, both of which say they aim to get the full story during the application process and give borrowers more control over paying off their home loan.
- Homestar Finance (ColCap) Homestar Finance was founded in 2004 and joined with international non-bank lender ColCap in 2018. Homestar Finance lends to homeowners, homebuilders and investors (including SMSF).
- Well Money Well Money is an online non-bank that prioritises taking borrowers' life circumstances into account during the loan process. It offers loans for first home buyers, investment property, refinancing, self-employed borrowers, debt consolidation and bridging home loans.
- Reduce Home Loans With Reduce Home Loans, borrowers are assigned their own Personal Finance Manager to help with the application process and ensure low interest rates. They have specific niche home loan products that target refinancing, investment, SMSF, first home buyers and pre-approvals, as well as cashback incentives.
- Freedom Lend Freedom Lend is a Melbourne- based non-bank lender that offers borrowers competitive products and good customer satisfaction with the convenience of an online set up and phone support. It offers a mix of owner occupier loans plus construction loans and SMSF lending.
- Pacific Mortgage Group Established in 2000, Pacific Mortgage Group is one of the largest mortgage providers in Australia and regularly offers some of the lowest rates on Money.com.au’s database.
Specialist non-bank lenders
There are also non-bank lenders that specialise in offering home loans for complex borrowing situations. They tend not to offer the most competitive rates, but can be ideal for people who are self-employed, have a low credit score, or need a bespoke lending arrangement for a specific, complex borrowing scenario (e.g. high value investment portfolio).
- La Trobe Financial Operating for over 70 years in Australia, La Trobe offers a variety of specialised home loans, including tailored support for self-employed individuals, international and rural borrowers, as well as its‘everyday heroes’ loan that assists police officers, firefighters, defence force personnel and medical services workers.
- Mortgage House Mortgage House has home loans that are targeted towards self-employed workers, alternative and low documentation and self-managed super funds.
- Pepper Money Pepper Money’s home loans are designed for borrowers in complex situations with loans for irregular income, low credit scores and low or alternative documentation. Borrowers can also opt for a 40-year mortgage, something very few banks offer.
- Liberty Financial Liberty has a suite of home loans for applicants needing low rates, flexibility, low deposit, low documentation, debt consolidation or overlooking bad credit scores, as well as loan terms up to 40 years.
- Yard Yard is a non-bank home loan provider that offers flexible lending options for borrowers in complex situations and includes features like offset, redraw and high LVRs. Its niche lending products include a specific NDIS loan.
- Skip Skip has a streamlined application process with no equity sharing or guarantors necessary, and lets borrowers apply with small deposits, low rates, low fees and no lenders mortgage insurance.
- WLTH Primarily based online, WLTH is a non-bank with fast online approvals, competitive rates, flexible lending options and interest-saving features like offset and redraw. It has P&I loans with up to 95% LVR and offset availability.
- Brighten Brighten is an international non-bank financial institution with offices in Sydney, Melbourne and Brisbane. It offers a suite of specialised loans, including options for borrowers with alternative documentation, as well as expatriate and non-resident borrowers.
- Bridgit Bridgit specialise in bridging loans that are designed as a temporary solution for borrowers needing fast approval to buy a new property before selling their current home.
- Granite Home Loans / ColCap Financial Group Granite exclusively distributes its products through aggregators and brokers, with niche loans that are specialised to the borrowers' circumstances.
- MA Money A non-bank lender that specialises in home loans for investments, consolidating debts, self-employed borrowers, credit issues, living overseas, non-residents, bridging loans and 40-year mortgages.
- Mortgageport Mortgageport provides a personalised lending service for borrowers needing flexible and tailored home loans.
- ORDE Financial ORDE has specialised loans for borrowers that are self-employed, managing numerous income streams, investing through a trust, or building a property portfolio.
- RedZed Lending Solutions RedZed is unique for its non-traditional credit score assessment, which makes it easier for borrowers with poor credit, alternative documentation, irregular income, or self-employed to be approved for a home loan.
- Think Tank Group Works exclusively with brokers to workshop all borrowing scenarios, Think Tank Group, streamlines the loan application process through alternative income verification with full doc and mid doc options available.
- Mortgage Ezy Mortgage Ezy is a broker-only non-bank lender with innovative technology to enhance its service and specialised loans for low documentation, investment and self managed super funds.
- Connective Lending Connective lending offers personal guidance from an experienced broker and competitive rates. It has flexible loans targeted towards self employed individuals, borrowers with diverse financial needs and circumstances.
- Household Capital Household Capital has reverse mortgage products for retirees that let them access the equity in their home while retaining ownership.
Non-bank lenders (but backed by a bank)
- Virgin Money Virgin Money is a consumer financial services provider that leverages the ‘Virgin’ brand to offer a range of financial products, including home loans. While its brand and marketing are not very bank-like, it ultimately is part of Bank of Queensland. Its home loans have competitive rates, useful features like offset and redraw, as well as access to the Virgin Money rewards program.
- Qantas Money Similar to Virgin Money, Qantas Money is an airline brand that’s spread its wings into consumer financial services. While considered a non-bank lender, it is in fact backed by Bendigo and Adelaide Bank. The Qantas brand is essentially being used to promote the loan products, but it has its perks, including borrowers earning Qantas points every year during the lifetime of their home loan.
- Unloan Unloan is a fully-digital counterpart of CommBank that offers variable rate home loans at a low cost and discounted interest rates for long-term customers.
- Up Up is a digital brand of Bendigo and Adelaide Bank Limited that offers low fee variable and fixed mortgages via its app.
- Tiimely Home Tiimely Home operates as both a mortgage broker and offers its own suite of simple fixed and variable home loan products, which are funded by Bendigo Bank.
Is a credit union a non-bank home lender?
No, credit unions are financial institutions that are owned by their customers, rather than shareholders, but they are technically still banks. They typically function similarly to other banks and offer the same range of products, including loans and deposit products.
Like commercial banks, mutual lenders like credit unions fund their home loans in large part through deposit services used by their members. These deposit products, like term deposits and saving accounts, are used to fund loans with the interest paid by borrowers used to fund the interest earned by savers. Any leftover interest earned is reinvested into the institution to benefit members, whereas commercial banks aim to return a profit to shareholders.
How do non-bank lenders’ rates compare?
Money.com.au’s analysis shows that non-bank lenders’ home loan interest rates are relatively competitive in the market, but the rates available will depend on which kind of non-bank lender you apply with and the specific provider.
Online lenders
Digital non-bank lenders are generally very competitive and are usually less expensive than the big four banks (ANZ, Commbank, NAB and Westpac). They can be more cost-effective because they are a fully digital service, with no branches and less staff to minimise overhead expenses.
Non-bank lenders with particularly low rate home loans include Pacific Mortgage Group, Homestar Finance and Unloan.
Specialist lenders
Non-conforming lenders that offer more specialised home loans generally have higher rates, especially for riskier loans, like low doc home loans. Since many lenders don’t offer high-risk loans, borrowers often have no choice other than pay the higher rate with a non-bank provider in order to gain access to credit.
Katey Russo, Mortgage Broker
Non-conforming lenders assess applicants on a risk scale and generally charge rates and fees in ranges depending on the borrower's level of risk. If you're looking at non-bank lenders because you have a low-credit score, difficulty keeping up with repayments or past defaults, it's important to take into consideration the extra fees and higher rates for being a high-risk borrower.
Katey Russo, Mortgage Broker
Are non-bank home loans safe?
Getting a home loan with a non-bank lender is generally as safe as going with a bank. All lenders must comply with Australian consumer protection laws and are regulated by the Australian Securities and Investments Commission (ASIC) and the National Credit Code.
If a non-bank lender does go out of business, their home loan portfolio would likely be sold to another financial institution. Other than the potential for confusion and temporary uncertainty, it would probably not disrupt the borrower’s loan or repayments in any major way.
Remember, if there ends up being an issue with your lender, it’s generally very easy to refinance your home loan with another provider.
How does an offset account work with a non-bank lender?
For a bank, an offset account typically functions as a transaction account linked to your home loan, that can be used for making everyday expenses and depositing salary payments. The balance within the offset account minimises the interest being charged on the loan amount.
A lot of non-bank lenders still have offset facilities available in their home loans, but they don’t function the same way. That's because non-bank lenders can’t offer deposit accounts as they’re not covered by the government’s Financial Claims Scheme.
Instead, there are two ways that non-bank lenders can offer an offset facility:
They work with an approved ADI who can ensure that the funds in the account are government guaranteed.
The offset facility is essentially a redraw facility that’s labelled as offset. With a redraw feature borrowers can make extra voluntary repayments towards their home loan and then withdraw them later if they need the funds back. Technically, the outcome could be the same as having an offset account in terms of minimising interest charges. The downside is access to the extra repayments may be limited and in the worst case scenario, you could lose access to those funds entirely.
It’s worth checking how exactly the offset facility works with any potential lenders if it’s a feature you plan to use.
Pros and cons of going with a non-bank lender
Pros
- Non-bank lenders often provide a faster and more personalised service
- Their borrowing criteria are typically more flexible than those of banks, meaning you may have a better chance of approval
- Non-banks offer specialised loans depending on applicants' circumstances that opens up possibilities for borrowers who would otherwise not be able to finance their project
Cons
- Some non-bank loans offer fewer loan features – for example, offset facilities are less common.
- There are far fewer home loan options to choose from if you exclude banks from your comparison
- Most non-bank lenders are based primarily online and are unlikely to offer face-to-face customer service which some borrowers value.
Katey Russo, Mortgage Broker
Non-bank lenders can also be beneficial for borrowers with a great application but who get a low automated property valuation from the main lenders. One recent client of mine had a perfect credit score and steady income, but the big banks kept undervaluing his property. It was only when we started looking at non-conforming lenders that the property was more accurately valued, and he was able to get a home loan.
Katey Russo, Mortgage Broker
How to apply for a non-bank home loan?
1. Contact a home lending specialist or mortgage broker
This step isn’t always required for home loans, but for some lenders that don’t offer online applications, talking with a mortgage broker could be the only way to apply.
2. Submit an application
The lender will require information about yourself and any joint applicants. While a non-bank is likely to have more flexibility when it comes to borrowing criteria, they’ll still need information about the prospective property, your credit history and financial details. Many non-banks can be quick to approve a loan based on the information provided in this step, but they’ll need supporting documentation for it to be fully processed.
3. Provide supporting documents
You will need to submit any of the required documents listed in the application, or during discussions with a lending specialist and mortgage broker. In more complex scenarios, this may require you to speak with your accountant to request documents or get signed declarations.
4. Property valuation and contract of sale
The final step in the application is for the lender to evaluate the property you're buying to guarantee that its value is high enough relative to the loan amount, also known as the loan-to-value ratio (LVR). They will also require a contract of sale for the property, before the loan can be fully approved.
Options compared
Home loan types
Borrower types
