Now, borrowers are banding together to get even better rates from lenders. In a move similar to what we have seen to achieve savings for consumers on power and phone bills, this revolutionary group borrowing move is dishing up big savings for property buyers. We talk to the man behind HashChing – Mandeep Sodhi.
Kevin: There’s a lot of talk about financing currently in the property market. I’m going to talk now to a gentleman I haven’t spoken to for a little while, but it’s good to have him back on the show, Mandeep Sodhi from HashChing.com.au.
Mandeep, thank you so much for your time. Good to be talking again.
Mandeep: Thank you, Kevin, for having me on your show.
Kevin: My pleasure. Tell me about HashChing and how you can help us get some finance for property.
Mandeep: On HashChing, we have two models. One is do it yourself, which is using the group buy concept. We’ve just recently launched it a week ago for consumers who are pretty much residing in their own place, which is owner-occupied, looking to refinance above $500,000.
We get them to join a group of borrowers with similar characteristics. Let’s say we get ten applicants who join a book of $5 million. Once we collect all the information about them, then we ask the banks or participating lenders to bid on the book. Right now, we have four lenders: Switzer, Mortgage Ezy, Pepper Group, and Gateway Credit Union who are trialing it. Once the book is completed, they start bidding on your whole book.
We believe that the group buy concept has been around – it has been tried on getting a good value on your electricity bills and also through the Groupon website – but no one has done it properly for home loans, so we’re now trialing it for the first time in the home loan space.
Kevin: Yes, it’s a fascinating concept, and I can see – as you say – it’s working well in other areas. Let’s talk about financing, because financing is rather personal. You get different people at different levels, so you’ll have a different group of people in the book. How do you work out “Oh, I might have a good credit rating but then I don’t want to be lumped with someone who’s not, because that’s going to affect how much I pay”?
Mandeep: We do have some strict criteria. You can only join a book if you have a minimum of 510 credit score. And don’t worry; we’ll do that check on your behalf, and it’s not recorded on your file. We also allow only those borrowers who have been with their current bank for a minimum of three years. So, as you can see, there is a strict criteria to join that book, because we want all the borrowers to have similar characteristics, and then only the banks would bid on it.
But in any case, if you don’t fit the criteria, then we pass you on to a broker in your local area who’s registered and verified by us, and they will look after your circumstances and still get you a better rate.
Kevin: Have you got a feeling for how much someone is going to save by joining one of these books?
Mandeep: On our platform right now, we have rates starting from 3.56%. So, the pressure is back on the lenders who personally can see the rates that are being advertised by the brokers, but also consumers have now expectations that “Hey, I can see 3.56% on the HashChing website, so I’d better be getting a better deal from the lenders if I’m joining a group and waiting for five days for lenders to bid on my book.”
Kevin: When I join a book and if the successful bank comes in and we all agree in the book – or you agree, whatever the case may be – that we’re going to go with that particular bank, does that bank then have an association with me as an individual, or is it that overall book?
Mandeep: The bank has to firstly place a bid on the whole book. You as a customer do not have to go with that lender. If you feel that another lender out of the participating lenders has a better value but they’re not the cheapest, that’s fine as well. You can still go with the other lenders. But 50% of the book has to go with the winning lender to be able to get that rate.
We then connect you to that lender and they will discuss with you in person how they can proceed and get you that rate.
Kevin: Have you got some history here, Mandeep? Has there been a book that’s been successfully completed?
Mandeep: No, we’re running the first book now. We only opened it last week. We’ve already received $1.12 million worth of applications out of the $5 million. So, there are two applicants. We’re just waiting for another four applicants.
Saying that, we’ve already received 22 registrations, so they are still in the process of uploading documents. As I mentioned, it’s a do-it-yourself process, so the consumers will have to upload all the documents themselves. But if you need some assistance from a mortgage broker, then we can connect you to the mortgage broker as well. But then you’ll have to move out of the book.
Kevin: It’s a fascinating concept, and it’s a going to be interesting to watch. Have you got a feeling for when the first book is going to be complete or ready to have an offer taken?
Mandeep: We only need seven more applicants now to join the book, and as I mentioned we already have 22 applicants in the registration process who are just uploading the documents now. So we are expecting it to finish by the end of this week.
You have to hurry up if you want to join the book, but that’s fine; we have the next book starting as soon as the first book closes. The second book opens up straight way once the first book is closed, so it’s not that you’re missing out on the book.
Kevin: Okay. You can get all the details at the website HashChing.com.au.
Mandeep: Correct. You can either go to www.HashChing.com.au, or you can directly go to groupbuy.HashChing.com.au and you’ll get more information there.
Kevin: There you go, HashChing.com.au or groupbuy.HashChingcom.au. Mandeep, thank you so much for your time. Congratulations on what you’re doing, and would love to get an update once you get that first book going.
Mandeep: Thank you, Kevin. Thanks again for having me on the show.