11 Sep 2020

86 400 slashes rates as you pay off your home loan

Neobank 86 400 has launched a new strategy to reward customers for paying down their home loan.

The lender has introduced tiered variable rates for its 'Own Home Loan', dropping borrowers' interest rates as they lower their loan to value ratio (LVR).

The three tiers of variable rates for owner-occupiers making principal and interest (P&I) repayments are:

  • 2.74% p.a. (3.02% p.a. comparison rate) for an LVR less than 80%
  • 2.64% p.a. (2.92% p.a. comparison rate) for an LVR less than 70% 
  • 2.59% p.a. (2.87% p.a. comparison rate) for an LVR less than 60%

Investors making P&I repayments can also take advantage of the tiered system, with rates of:

  • 3.09% p.a. (3.36% p.a. comparison rate) for an LVR less than 80%
  • 2.99% p.a. (3.27% p.a. comparison rate) for an LVR less than 70%
  • 2.89% p.a. (3.17% p.a. comparison rate) for an LVR less than 60%

The new rates are effective from 20 August 2020 and apply to all variable rate customers, including existing Own Home Loan customers.

86 400's standard variable rate for owner-occupiers is 4.10% p.a. (4.36% p.a. comparison rate), and all home loans are only available through a mortgage broker.

Melissa Christy, Lending Product Lead at 86 400, said the neobank was thrilled to reward customers for paying down their loan.

"We built 86 400 to help Australians take control of their money," Ms Christy said.

"By reducing the variable loan rates for customers with more equity in their property, we are helping our customers do more with their money. With rates at an all-time low, it's a great time to refinance."

86 400 is also offering a $2,000 cashback reward when you refinance before the end of the month and boasts an approval time of hours, rather than days. 

The neobank celebrated its first anniversary as a bank in July, launching its savings and transaction accounts in September of last year and its all digital mortgage business in November.

Since then, the lender has funded over $40 million in home loans and has its sights set on $2 billion in home loans by the end of 2021. 

It's the second lender to announce a tiered home loan system, with non-bank Athena announcing it's 'Athena Accelerates' offering last week.


The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

SOURCE: https://www.savings.com.au/home-loans/86-400-slashes-rates-as-you-pay-off-your-home-loan

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