Brokers will soon have access to an innovative product that enables borrowers to obtain rates as low as 2.75 per cent from their mortgage provider.
Loan Reducer gives borrowers the power to repay their home loan sooner and targets home owners with both owner-occupied and investor loans.
Loan Reducer has already licensed national mortgage manager Loan Ave as its first distribution partner. Brokers will soon be able to offer their clients discounted home loan rates as part of a unique, game-changing approach to mortgage lending.
The patent-protected system allows the lender to establish their required interest margin for risk against each loan, set the overall interest rate required, and calculate the appropriate interest for each loan.
Loan Reducer operates with a ceiling rate on the investment loan (the Reserve Bank's cash rate plus 3.5 per cent) and a floor rate on the owner-occupied loan as low as 2.75 per cent (RBA cash rate plus 0.50 per cent). The Loan Reducer calculator enables a lender to set their required interest rate return – arriving at the level of discount possible on the owner-occupied loan and the interest rate in the investment loan.
Mark Ashenden, executive director and founder of Loan Reducer, said the company is very excited about its controlled release into the domestic market.
“We have been working hard over the past two years with banking and finance specialists, funders, lenders, patent lawyers, numerous legal and accounting experts and IT specialists to fully test Loan Reducer, and we are now in the position to genuinely help Australians own their own homes sooner,” Mr Ashenden said.
The receipt of a product ruling from the Australian Taxation Office on 25 March (PR 2015-2) saw Loan Reducer ready for release to the Australian market.
Mr Ashenden said Loan Reducer is set to radically shake up an industry that has lacked product innovation for many years.
“The next month or so is about proving the demand and testing the processes in the market, and while we are convinced in the merits of Loan Reducer, the final and ultimate test is the consumer and their appetite for the product,” he said.
This final stage prior to broad national release will be undertaken with mortgage manager Loan Ave.
Mr Ashenden said Loan Ave director Mr Paul Collins is very excited to be part of the launch of Loan Reducer and the first to deliver the product.
Loan Reducer is not for every home owner nor is it for every loan writer, Mr Ashenden said, adding that all distributors require accreditation and operate under licence.
The product will be distributed initially through established mortgage managers, who will in turn accredit brokers to sell Loan Reducer to qualified borrowers.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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