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flongle on 2UE with Stuart Bocking

September 22, 2014FlongleGeneral

Michael Lee explains what flongle does to Stuart Bocking with Your Business Day on 2UE. Click to listen.

 

https://s3-ap-southeast-2.amazonaws.com/cdn-images-videos/Mortgage+Contests/Front+End/blog/2ue+Stuart+Bocking+-+flongle+2014-09-15.mp3

 

About The Mortgage Competition Case Study:

Mick sights a real life case study of a recent contest analysed over the next 5 years:

If the Borrower stays where they are will pay;   $ 68,877
Borrower switches to a new deal:                        $ 60,729
Total possible saving:                                          $   8,148

The borrower does not take a backward step in either loan or lender quality and both their new loan and the old one includes an offset account.

3 Important Points

Mick makes three statements which should be corrected/explained about this example:

  1. Mick says savings are around 10%. The correct figure is $8,148 / $68,877 x 100 so the correct saving over 5 years is 11.83%
  2. He says these real life contest savings are “pretty good”, but we think this saving is excellent.
  3. Mick says the borrower’s cost is less than $60,000, however it actually models to $60,729 which is still a big saving.

Assumptions:

This type of analysis is available for all contest results (including a range of exit points, not just 5 years) and in this case the assumptions are:

  • Same loan term for new and old loan
  • Same repayment type
  • Same rate type
  • Same loan features and lender quality
  • Same monthly repayment for both loans (based on budgeted monthly repayment
  • Based on current interest rates, fees, discounts and concessions.

 

 

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