Purchasing a new home in Australia comes with similar challenges you might face in other countries; credit checks, down payment, grueling paperwork, etc. The typical application process might look something like this:
1) Choose your broker or agent
2) Apply for mortgage
3) Get pre-approved
4) Determine how much you can put down as deposit
5) Find house (complete the inspections and reporting process)
6) Make an offer
7) Sign paperwork once offer is accepted
HashChing, however, is determined to change traditional home buying in Australia. Launched in August 2015, HashChing is Australia’s first online home loan marketplace that instantly connects borrowers with verified mortgage brokers in their area who are rated by other local borrowers.
We spoke with Mandeep Sodhi, founder and CEO of HashChing, to learn more about how their unique program is changing homebuying.
How HashChing Rates Brokers
The catalyst behind launching the company came from Mandeep Sodhi’s personal homebuying experience.
Sodhi sourced his first home loan through his local bank, which was also his place of employment, only to learn that his friend got a much better rate through a mortgage broker. He was bummed.
“I realized I put too much faith in my bank and simply grown accustomed to a culture that put profit before borrowers,” said Sodhi. “When it comes to one of the most important and impactful financial decisions made in a lifetime, there are no genuine systemic ratings, reviews or profiling systems for mortgage brokers and lenders,” he added. So, he took action and made changes.
HashChing’s business model helps borrowers gain insight into available rates from different lenders and gain access to on-demand mortgage brokers. The company is partnered with brokers to supply negotiated rates and have developed a dynamic broker rating system to help borrowers make the best financial decision for their needs. The benefits of customer reviews are twofold; they guide future borrowers and provide feedback to brokers, while also continually refining and building HashChing’s hassle-free platform.
HashChing collects extensive data on settlements and sales which give it unique insights into the mortgage landscape and an edge in the market. This proactive approach, coupled with its unique business model, gives borrowers deals that are not advertised by lenders anywhere else.
Customers Feel Confident They Have the Best Rates
It’s not uncommon for brokers to work with just a select handful of lenders even when the company advertises that they work with hundreds of lenders; that’s not the case with HashChing. They have different mortgage brokers from different aggregators, which means they are sending leads to 20-30 different lenders each month, instead of a select two, three or four lenders.
Sodhi is very confident in the rates he is offering his customers, so much so that he doesn’t feel a need to offer any incentives. For example, some lenders will offer a form of guarantee to pay the difference or match a loan rate if you secure a loan with them and then find a better rate after closing on the loan.
“We don’t do that because we’ve realized that the customer can’t find the deals that our brokers can offer because it’s already the lowest rate on the market,” Sodhi said. HashChing takes pride in contacting every single customer (that’s rate shopping) on their platform by phone or electronic communication. Brokers reach out to ensure the customer has a solid understanding of the pros and cons of the deal and to answer any questions.
Crowdfunding Mortgages
HashChing has a very unique program, their GroupBuy Refinance program, which was just piloted last fall. The program used a group of 10 borrowers and 4 lenders to help participants of the group (Australian homeowners) refinance their mortgages at a group rate. By joining together and offering their mortgages as a bundle, lenders are more likely to offer a discounted or preferred refinance rate to the entire group.
Groups can be created using any set of lender criteria. Some lenders may require that:
- the home must be owner-occupied
- the borrower must be at least three years with their current loan
- the loan amount must be $500k or more
- the borrower must have a credit rating of average or above.
Lenders then bid on offering loans to these highly qualified borrowers. “The result is that we give borrowers who may be applying for a half-million dollar loan the negotiating power of a $5 million loan,” Sodhi said.
What’s also really cool about this program is that a homeowner is under no obligation to accept an offer from the lender even if they’ve joined the group. If someone joins GroupBuy and a lender makes a bid, the applicant is not obliged to accept the offer and continue just because they started the process.
A maximum of 10 borrowers or mortgages can be grouped together through this program. Rates are based on the overall average credit score, loan amount and financial status of the borrowers combined. Borrowers must have an Equifax credit score of 510 or above in order to participate.
HashChing is looking to relaunch the GroupBuy project in late 2018 once more lenders are on-boarded.
The Future of Australian Mortgages
It’s hard to predict exactly what will happen in the future with mortgages, but Sodhi believes a similar experience could be expected as you would get with Amazon, Netflix and Uber. “Mortgages have not changed over the last couple of decades and it is becoming nearly impossible for millennials to save a huge deposit for the loan,” he said.
New disruptive lending products, such as HashChing’s GroupBuy Program will allow more buyers to enter the market. He also said open banking will be key to driving the future of mortgages.