25 July 1999
CALLS for all advertised loans to include any upfront charges has prompted one lender to refund fees.
The Internet lender is also under-cutting Westpac and Citibank loans, for which it is an agent.
Non-bank lender Wizard Mortgage last week backed a long-standing call by consumer groups for all home lenders to publish the annualised average percentage rate (AAPR), which is the interest rate after taking into account hidden fees.
Wizard, one of the cheapest lenders, is the only one which publishes its nominal rate and AAPR in its advertisements.
But the Internet-based LoanNET (www.loannet.com.au) has taken this one step further by not charging any fees and refunding the $150 valuation fee when the loan is settled.
LoanNET is an agent for Interstar (which supplies funds to several non-bank lenders), Westpac and Citibank.
While it can obtain Westpac and Citibank loans at a lower cost than if a borrower went directly to them, on its fee-free Interstar loan it can also refund the $150 loan valuation fee.
"There are no set-up fees at all," said LoanNET corporate strategy manager Helen Toy.
The Interstar loan, which includes redraw facilities, has one of the cheapest rates of 5.7 per cent - more than 0.5pc cheaper than the popular Aussie Home Loans.
Ms Toy said the entire loan is done online but "you need to be prepared to do it all yourself".
While this meant you had to answer more questions early on, approval was given sooner over the Internet as well.
"Other online lending sites are really just answering machines with graphics," Ms Toy claimed. "After 20 minutes of answering questions you're told somebody will contact you. But we do everything on the Net and e-mail. It's completed there and then, there's no having to get back to you."
She added that e-mails are "PDF documents" so could not be changed or tampered with. But if you wanted to change your mind, you could delete your application from the system altogether.
Mortgage documents are e-mailed to borrowers, who then download them, sign them and fax them back to LoanNET's Melbourne office.
The website also allows you to track the progress of the loan, for example to see if a cheque has been received or a valuation done.
Ms Toy said LoanNET was able to refund upfront fees because it gets paid commission by the lenders and has much cheaper processing costs.
"So we're ahead on both fronts and the borrower benefits too," she said.
She called for legislation to define the AAPR and make it compulsory for lenders to use the figure. "We need one standard," she said.