Homeloans Ltd throws down the post DEF gauntlet
New proposition and renewed competition
Non-bank mortgage provider Homeloans Ltd has today announced its proposition in the face of the banning of exit fees on home loan products from 1 July 2011 – and the home finance company is looking forward to competing on a level playing field with the major banks.
“We constantly hear broker and consumer feedback expressing concern over the large portion of business being sent to the majors, so this presents a great opportunity for brokers to refer business to alternative lenders,” says Tony Carn, Homeloans’ general manager third party sales.
Under Homeloans’ new proposition, its entry fee, ongoing fee structure and interest rate structure will remain unchanged – a move the lender says will make its offering more compelling in the absence of Deferred Establishment Fees (DEFs).
“The removal of DEFs eliminates consumer uncertainty, places Homeloans on an equal footing with the banks and means we are a true alternative,” says Tony Carn, Homeloans general manager third party sales.
“This is a great opportunity to offer real choice to consumers, particularly as many remain dissatisfied with the limited range of lenders they feel forced to deal with.
“There is currently a lot of competition in the market, and a lot of banks are offering very attractive headline rates. But it must be remembered that behind most great interest rates there is often a sizeable annual fee – and that can mean that the real cost to a borrower is greater than it seems, and often increases over time. At Homeloans we offer some great alternative products – without ongoing fees.”
Homeloans has written to its introducers advising them of the lender’s necessity to establish clawbacks on loans repaid within 18 months, following the removal of DEFs. “Our scale of clawbacks will be directly in line with those most commonly accepted in the broker market,” Carn says.
For loans repaid within 12 months, upfront commissions will be subject to 100 per cent claw back, with 50 per cent for loans repaid between 12 and 18 months. Homeloans’ commission levels remain unchanged.
“I’m confident that our new offering and the market conditions post 1 July will be positive for the industry,” says Carn. “We believe it will see in a new era of competitive opportunity for the Australian mortgage broking industry.
“Consumers will now have the ability to consider their home loan partner without being clouded by potential issues regarding future exit costs.
“It’s certainly opportune for brokers to have a closer look at the competitive alternative. We also offer alternative to Lenders Mortgage Insurance on both Full Doc and Lo Doc loans, which can save thousands of dollars upfront. Additionally, we can assist brokers to provide a more comprehensive review, using a simple calculator which allows all costs associated with a loan to be compared over a chosen period.
“And, of course, we back this up with the unique ability to access a range of credit policies for full doc and lo doc applications. All of this is backed up by 25 years’ experience across Australia, award-winning customer service and strong back-end support,” Carn adds.