What qualifications do you have?

Advantage Finance is a full member of the MIAA. All of our loan consultants are also required to become members of the Mortgage Industry Association of Australia and Accredited Mortgage Consultants. As Accredited Mortgage Consultants we are required to undertake continuing professional Education. We have also had training in each of the lenders products that we deal with and regularly undertake refresher training.

In addition, our senior sales consultant is a qualified financial planner and he reviews all of our recommendations to ensure that they are suitable.

What is a wholesale loan?

Some lenders prefer to distribute their loans through mortgage originators rather than through their own retail network. Without the cost of maintaining a retail network and advertising the lenders are able to pass the funds to the mortgage originator at a "wholesale" rate. The loans have the same features, flexibility and security as the loans sold via the retail arm of the lender, they are just branded differently. Many of our well known lenders have a wholesale lending arm.

Is arranging our loan through Advantage Finance safe?

Advantage Finance is a mortgage Originator and a mortgage manager. The funds that are lent to you come from the wholesale lending divisions or retail divisions of some of Australia's most respected lending institutions. We only deal with reputable established lenders and your loan agreements are with them, not Advantage Finance. For example if we organized a loan for you from a lender you would have exactly the same consumer rights as if you dealt directly with that lender. Getting a loan with us is no less secure than through any bank, building society, or credit union.

Of course, we are only human and occasionally we may make a mistake. If this occurs we guarantee that you will not be disadvantaged by placing your trust in us to organise your loan. Whatever it takes, we will ensure that you are not financially disadvantaged in any way by letting us arrange your finance. MIAA regulations ensure that we are covered by Professional Indemnity Insurance offering you, the client, even more security.

Why are your wholesale loans so cheap? What's the catch?

There is no catch and there are no hidden fees and charges. We don't have a costly branch network or marketing budget, therefore we can afford to keep our wholesale rates as low as possible. Our lenders provide us with the funds at wholesale rates which are lower than their normal retail rates as they don't have to pay high costs to maintain a branch network. You are generally not able to access these rates through a normal branch network.

How can I be sure your wholesale loans are so competitive?

We are consistently rated among the top 10 lenders in each category of loans by CANNEX. In many cases we are rated number 1. CANNEX is an independent and highly regarded financial product researcher. Their ratings compare us to over 350 other lending institutions.

Do you get paid the same level of commission regardless of which lender you recommend?

The level of commission or income we receive will vary from lender to lender and will also differ depending on if it is a wholesale or retail loan. We are happy to disclose the level of commission we receive on the loans we recommend to you.

Why do some loans have application fees and monthly fees whilst others don't?

With all loans there are certain costs involved in the setup and ongoing management of the home loan. Some of these costs are fixed and others are variable depending on a number of factors such as the loan size, the value of the security property and the features of the loan. The aim of the lender is to cover all of these costs plus to make a profit and with a home loan they have three ways of achieving this:

1. Via the interest rate charged
2. Via upfront or application fees or
3. Via ongoing monthly or annual fees.

As a general rule the higher the interest rate, the less need there is for a lender to charge an upfront or ongoing fee as the costs of the loan is more than adequately covered by the additional interest earned. Of course there will be some lenders who achieve the best of both worlds with higher interest rates and higher fees.

Which is the best option for me, a loan with no fees and higher interest or a loan with higher fees but lower interest?

There is no right or wrong answer to this question as it depends on a number of factors such as the amount and expected term of the loan, the fees charged and the interest rate applicable to the loan.

A loan with a higher upfront fee but lower interest rate would tend to be better suited to higher loan amounts and loans over a longer term.

A loan with no, or a lower upfront fee and a higher interest rate would be better suited to a lower loan amount and shorter term loans.

When comparing loans to determine which one is the best for you, the government's Compulsory Comparison Rate (CCR) legislation is designed to assist you.

How does the Compulsory Comparison Rate (CCR) work?

The Government's Compulsory Comparison Rate legislation aims to give you a real indication of the true cost of a loan over a given period of time. All lenders are required to give you a comparison rate table for all of their loans which show the true cost of a loan for different loan amounts over different loan terms. The comparisons are standardised and take into account application fees, ongoing fees and interest charges over a given period to obtain a true rate for the loan. The lower the comparison rate of the loan, the lower the overall cost of the loan and the better it is for you.

A practical example: Loans A, B and C have the same loan features but different interest rates and application fees.

• Loan A has an interest rate of 6.56%, no application or monthly fees
  
• Loan B has an interest rate of 6.40% with a $600 application fee and $6 per month
  
• Loan C has an interest rate of 6.30% with a loan application fee equal to 1% of the loan amount and no monthly fees.  

As you can see from this simplistic example, the loan with the lowest fees has the highest true rate and the loan with the higher application fees has the lowest true rate.

Of course there are other things you should consider as well when choosing a home loan.

The purpose of the exercise is to point out that you need to focus on the overall cost of the loan, not just the upfront and ongoing fees.

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