Group Lending is currently seeing a lot of support for our various special offers under the Flexi Options product. With Owner-occupied rates starting at 3.69% and Investment rates starting at 3.89%, it is easy to see why.
However, we thought we would highlight the Renew and restart product range and how it has been designed to help you assist with not only your client's short term financing needs, but also their longer term requirements. With the specialist lending market one of the few areas in the mortgage industry expanding, it is important to be aware of all of the options available here. To follow are some fast facts to help you identify when the Group Lending Renew and Restart range may be able to assist:
- While the product range is funded by Pepper, it is not just a simple re-hash of the Pepper Retail product range.
- The pricing structure of the Renew and Restart range has been developed with direct feedback from Vow brokers. When considering a Near Prime or Specialist Lending solution, the feedback indicates that Vow brokers are looking for a solution for the short to medium term, the intentions to refinance these clients into a prime solution within a period of 1 - 3 years.
- As a consequence of this, we have developed a pricing structure which is designed to minimise the upfront costs of entry while making the on-going rate as competitive as possible.
- Therefore, when compared to Pepper retail (when Mortgage Risk Fees are payable for all LVR's), the Renew & Restart range may have a slightly higher interest rate, but charge no risk fees on the majority of LVR bands. (High LVR's still have MRF - these instances are highlighted on our rate sheet which is attached for your reference).
- An example of how this can keep money in your client's pocket is provided below, most importantly, this approach provides Vow with a point of difference against much of the specialist lending competition in the market place!
- The main thing to remember is that with Specialist Lending, you cannot just compare on interest rate, given loan terms are generally shorter, fees charged do have a substantial impact on the overall cost of the loan. Please bear this in mind when recommending a solution for your next client.
Interested to find out more, feel free to contact the team as below.
Client looking to borrow $600,000 against a property worth $860,000. LVR just below 70%.
Unfortunately circumstances mean that the loan sits within the Specialist Lending segment.
The intention is to allow the customer to establish a good payment history and clear up their credit report. The intention to refinance in approximately 2 - 2.5 years.
Group Lending Product Solution:
Restart Full Doc Loan. Interest rate 6.59%, $15pm fee, upfront fee $495 (includes 1 standard valuation), legals approximately $440 plus disbursements. Mortgage Risk Fee $0
Pepper Retail Product Solution:
Pepper Advantage Full Doc. Interest rate 6.29%, $15pm fee, upfront fee $995 (includes 1 valuation), legals approximately $440 plus disbursements. Mortgage Risk Fee $6,000
Benefits for the scenario are highlighted in green and disadvantages in red.
Upfront fee saving for using Group Lending equates to $6,500, whereas the monthly payment (based on a 30 year P&I loan) the client makes with Group Lending is $118.06 more (assuming the risk fee is not added to the loan for Pepper retail).
Given the intention to refinance within 2 - 2.5 years, from a fee and interest perspective, the Group Lending Product is clearly cheaper for the customer. Depending on how you look at the scenario, Pepper retail would only be less expensive if refinancing was not possible within approximately the first 4 years.
This just highlights the need to look beyond just the rate that may be highlighted in Symmetry or Vow Net, and to consider the total cost to your client.
* Note the outcomes of examples do vary according to credit impairment and LVR.