Non-major lender Bank Australia claims to have made history last week when a borrower completed what it believes to be the nation’s first electronic mortgage.
Recent legislation changes in Victoria allowed Bank Australia and the borrower to send and receive the mortgage documents via the lender’s internet banking portal.
After receiving the completed documents, Bank Australia then settled and lodged the mortgage electronically via PEXA, the online property exchange network that allows financial institutions to lodge documents with land registries and complete financial settlements.
Speaking to Australian Broker
, Martyn Norman, head of product and credit at Bank Australia, said while electronic mortgages are currently only able to be completed in Victoria it’s still an important step forward for the industry.
“It’s certainly an exciting thing to be a part of,” Norman told Australian Broker
“Victoria’s actually the only state that allows it. They made the legislative changes about 18 – 24 months ago to the Transfer of Land Act to allow it to be done electronically and to their knowledge no one else has done [an electronic mortgage],” he said.
“We did a lot of work around trying to clarify that. We spoke to PEXA, Land Victoria and to their knowledge nobody else has done it.”
By cutting out the need for hard copy forms to be mailed back and forth or for borrowers to visit a branch, Norman said the electronic process can have a mortgage completed in a day or two, rather than a week.
While the electronic system may speed things up in terms of having the documents completed, Norman said it had also saved time in other areas.
“We didn’t think it would save us a huge amount of time at our end, but it’s made a real difference,” he told Australian Broker
“We produce the document in PDF form and not having to print, collate, mark where they need to be signed and then put it in an envelope really saves a lot of time.”
Besides saving on time, Norman said borrowers are likely to embrace the electronic system due to their familiarity with internet banking and the security it offers.
“If you think about it, you’ve got a customer who already goes online and transfers money all the time. In this situation there’s no money going out for them, it’s actually coming in through the loan process.”
Though it is only available to borrowers in Victoria at present, Norman believes launch of national mortgage forms will be the impetus for the electronic system to be rolled out across the country.
“The timeline is for [the national mortgage from] to come live in May next year. The ACT isn’t involved in that at the moment, but all of the other states have made a commitment that they’ll make changes to their legislation to enable electronic acceptance of mortgages and I think they’ll do that in line with the national form.”