Ubank launches 10% deposit, no insurance home loan

NAB-owned Ubank has launched its new home loan product alongside a list of "lifestyle suburbs" where young Australians could purchase with deposits as low as $50,000 - although that doesn't include stamp duty.

The 10% deposit loan is available through Ubank's existing Neat and Flex (with offset account) home loan products for those making principal and interest (P&I) repayments for loan amounts up to $2 million.

The loan waives the need for lenders mortgage insurance (LMI), typically charged on home loans where deposits are under 20%.

While the loan set-up is enticing, the 6.19% p.a. variable interest rate (6.21% Neat; 6.43% p.a. Flex comparison rate*) may be less so.

Many lenders offer interest rates well under that mark for 90% loan-to-value ratio (LVR) home loans but they generally come with a one-off, upfront LMI charge, often in the thousands - or tens of thousands - of dollars.

Lenders mortgage insurance is levied according to individual circumstances and can vary between lenders and insurers.

LMI is also often baked into the loan, at the expense of paying interest on it, to ease the upfront burden.

See also: Lenders mortgage insurance calculator

Lenders who may choose not to charge LMI on loans with deposits below 20% generally build in some cushioning with their interest rates as low-deposit loans are considered higher risk.

How does the Ubank rate compare with other interest rates?

Bendigo & Adelaide Bank's Up offers a 90% LVR home loan with a variable home loan rate of 5.20% p.a. (5.20% comparison rate*) - 99 basis points below the Ubank offering - but with LMI.

Non-bank lender loans.com.au offers rates from 5.29% p.a. (5.33% p.a. comparison rate*) for a owner occupier home loan with LVRs up to 90%, also with LMI.

A number of smaller lenders offer 10% deposit home loans at interest rates at least half-a-percentage point under the newly launched Ubank rate.

Borrowers will need to do the sums on whether avoiding LMI may be offset by the additional interest paid - in the short-to-medium term at least.

See also: Are you eligible for an LMI waiver?

What other options are there?

For first homebuyers, the rebadged 5% Deposit Scheme also allows eligible borrowers to avoid LMI, with the federal government effectively guaranteeing home loans for borrowers with deposits less than 20%.

From 1 October 2025, the government removed income caps for participants and raised property price caps to allow greater access to its existing Home Guarantee Scheme.

In its first month, around 5,800 homes were purchased through the extended scheme, up almost 50% on October last year.

It's estimated almost one in 10 homes purchased nationally in October were through the 5% Deposit Scheme.

Cotality data, released on Monday, found homes falling under the scheme's price caps increased in price by 1.2% in October, compared to 1% for those above the caps.

Why has Ubank launched the 10% home loan?

But not all young Australians are eligible for the scheme.

Some properties may fall outside its price caps while the scheme is also not available for those looking to purchase for investment purposes.

See also: The pros and cons of rentvesting

Ubank said its new loan is for owner occupiers and property investors, giving younger buyers greater flexibility to enter the market sooner.

In launching the new product, Ubank has released research pinpointing suburbs under 25 kilometres from state capital cities "where younger Australians can own or invest" in affordable metro markets.

Below are the lowest deposit requirements for each capital, based on median values:

City	Suburb	Distance from CBD	House or unit	10% deposit required
Sydney	Harris Park	19 km	U	$50,000
Melbourne	Coolaroo	17 km	U	$61,000
Brisbane	Woodridge	24 km	U	$46,000
Canberra	Greenway	23 km	H	$62,000
Perth	Glendalough	5 km	U	$48,000
Adelaide	Brahma Lodge	20 km	H	$69,000
Darwin	Gray	23 km	U	$31,000
Hobart	Glenorchy	7 km	U	$46,000

Source: Cotality data

While Ubank's chief lending officer Ray Jokhan acknowledges low deposit loans aren't for everyone, he said they can offer earlier access to the market.

"We've already seen customers buy sooner with our existing 15% deposit product, using it as a stepping stone to their first home," he said.

"As they build equity and their loan-to-value ratio drops below 80%, they become eligible for better rates - and we regularly review those with them."

Ubank is wholly owned by National Australia Bank with a home lending book of $16.4 billion, or around 4.5% of NAB's total home lending.

NAB's full year results, released last week, show Ubank saw a 22% increase in lending over the last financial year.

Image by Mart Production via Pexels

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Important Information and Comparison Rate Warning