Renew & Restart comparison

You may know that the Vow Renew & Restart range is funded by Pepper, but what you may not realise is that the products have been structured to minimise entry costs for our customers.

Rather than providing the same product with a different brand, Pepper and Vow are providing complementary products, so the one that's best for your customer depends on their needs.

The key thing to remember is that by comparing the Renew & Restart product range against market competitors (and Pepper retail) based solely on interest rate, you may not be giving your customers the best outcome.

To illustrate this, we have lined up the Vow Restart Ultra Full Doc loan and compared it to the Pepper retail equivalent (Advantage Plus Full Doc loan). The purpose is not to encourage you to sell one option over another, but to highlight how they meet different customers' needs, based on their short, medium and longer-term plans. Those needs will dictate which option best serves your customers' requirements.

Impact of Fees

If you were to compare the loans based just on interest rate, the Pepper product would appear to be cheaper across all of the LVR bands. However, that comparison would not take into account the following key differences in the product range:

  1. No risk fee payable for each of these LVR bands on this lending solution (Group Lending offer no risk fees up to 85% LVR in certain product types).
  2. Lower Application fee, while the zero application fee special has ended, our fee is still $500 less than Pepper Retail
  3. No Title Protection fee payable, saving $400 per loan.

Timeframe for the loan

As a general rule, Vow Home Loans will provide a lower cost of entry (sometimes substantially lower) while Pepper Money retail will have a lower end rate to the customer. The option that best serves your customer requirements is really dictated by how long they intend to keep the loan for (as many people requiring a Specialist Lending solution may be considering a refinance into a Prime product within a couple of years).

To highlight the differences, we have provided a total cost (fee differences incorporated) comparison based on 2 years Interest Only, fully drawn (approximating a loan life of around 2.5 years) and illustrated the relative costs/savings of the Vow branded product verses the Pepper Retail product. The table below shows the comparison based on a $400,000 loan.*

Up to 55% Up to 65% Up to 70% Up to 75% Up to 80%
Restart Ultra Full Doc 6.69% 6.89% 7.09% 7.54% 7.93%
Pepper Advantage Plus Full Doc 6.04% 6.14% 6.69% 7.19% 7.44%
Rate benefit for Pepper Easy Alt Doc 0.65% 0.75% 0.40% 0.35% 0.49%
Additional costs for Pepper loan:
Extra Risk fees payable for Pepper Easy 1.00% 1.25% 1.25% 1.50% 1.75%
Higher Application fee ($995 compared to $495) $500 $500 $500 $500 $500
Higher Title Protection Fee ($400 compared to Zero) $400 $400 $400 $400 $400

$400,000 loan comparison

Interest Benefit calculation 2 years (Interest Only) $5200 $6000 $3200 $2800 $3920
Risk fee -$4000 -$5000 -$5000 -$6000 -$6000
Lower Upfront Fee Benefits -$900 -$900 -$900 -$900 -$900
Net benefit (positive means Pepper Retail better, negative means Renew Better) $300 $100 -$2700 -$4100 -$3980
Pepper Pepper Restart Restart Restart

The outcome is that the Vow Renew Product (for the example shown) is considerably cheaper in terms of customer total out of pocket for LVR's between 70% and 80%, and for lower LVR's Pepper is marginally cheaper.

What does this all mean?

The outcome is that the Vow Renew Product (for the example shown) is considerably cheaper in terms of customer total out of pocket for LVR's between 70% and 80%, and for lower LVR's Pepper is marginally cheaper.

We conducted this exercise across all of the Near Prime and Specialist products and LVR bands and found that the Group Lending pricing works out:

  • Better for our clients in 23 out of 37 price points
  • Even in 2 out of 23 price points
  • Pepper is cheaper in 12 out of 37 price points.

The key point to remember is that this comparison only holds true for the example provided. If your client expects to spend 5 years in the loan product, this will sway the advantage to the Pepper Retail Product, while if they were only to spend 18 months in the product, more Vow branded product options would be beneficial for that scenario.

If you have a scenario you would like to discuss, please feel free to contact the guys below. Should you wish to view the comparison of all of the near prime and specialist lending products, please contact for more detail.

Craig Herden (Relationship Manager)

0478 537 841

Max McInerney (Relationship Manager)

0412 000 029