Glossary

A mortgage contest is where we help you design and capture your ideal mortgage as well as your income, assets, liability and expense information, then publish that information enabling an open market of lenders and mortgage brokers to compete to win your loan.

Our website then helps you sort, filter and prioritise to get find the best deals bid to win your contest.

Your anonymous contest is published and accessible to all lenders and brokers and it’s completely FREE for them to compete in flongle to win your loan. However to protect you from fake offers, businesses or unqualified bids, lenders and mortgage brokers must first register and and pass our verification audits.There are no fees or charges levied against any lender or mortgage broker by flongle or its associates for any of this activity so that the most competitive lenders as well as those with the deepest pockets are free to compete by offering you their best possible deals.

Prior to launching your contest, you can also, send special invitations to lenders which you can choose from a comprehensive list of over 100 lenders with a click of your mouse. This sends a fax to your chosen lenders to let them know you are in the market (your identity remains anonymous) and how to access your contest

It means the most competitive, “fair go” bidders are able to compete on a level playing field against even the biggest banks by simply investing a few minutes considering your needs and entering their deal into flongle. However things that may prevent some lenders and mortgage brokers from bidding include:

• No access to the internet;
• A reluctance to offer genuinely competitive mortgage deals;
• A lack of interest in winning your business;
• An unwillingness to subject their deal to independent, professional scrutiny;
• Inadequate insurance, dispute resolution or credit licence;
• A history of questionable conduct;
• The lack of solutions that are appropriate and not unsuitable for your situation;
• A lack of awareness of the existence of flongle.

Consequently, we cannot guarantee that all Lenders and Mortgage Brokers will participate in flongle to win your business. Our independent service is available for them to use free of charge however they are not obliged to participate if they choose not to.

To counteract a lack of awareness, flongle contacts all known lenders at least annually in addition to occasional promotion on respected mortgage industry web sites, plus of course, you can send a Special Invitation.

We also work actively to ensure participation of the most competitive bidders ensuring that, subject to your eligibility, you can discover some of the best mortgage deals on loans from major lenders including ANZ, Commonwealth Bank, Westpac, St George, BankWest and many more. To view the current list of these lenders visit our website at www.flongle.com.au/lenders.

Average Retail Savings is the Average Retail Savings for a sample of data, where Retail Savings have been made of the specified period.

You can change the specified period by altering the “Exit After” period in your contest results. Doing this recalculates the Average Retail Saving based on the Exit After period selected by you. It will also re-rank and filter your Top Deals list.

If no period is specified, the Average Retail Savings will be based on Retail Savings over the full term of the loan.

Related Terms:

• Retail Savings
• Exit After

A Bid is a mortgage deal individually created, priced and suggested for you by a Bidder which could be a bank, mortgage broker or non-bank lender.

Although interest rates may change, any special discounts, concessions offered to you by the bidder must remain available to you for a minimum of forty two (42) days after the bid has been place. Any ongoing rate discounts, rebates or concessions must apply for the life of your loan, however the interest rates themselves may change in line with lenders standard variable or relevant fixed rate for the product suggested.

When you take your loan, you will probably take it over a long loan period of say 20 years or more, however you’ll probably change, pay it off (YAY!) or refinance it in a shorter period.

That’s what “Exit After” is. It allows you to test one, two or a few more realistic exit points for your loan. When you do, flongle recalculates the TIC for the “Exit After” period you select, then re-ranks and filters all bids because some deals start out expensive and get cheaper over time ad vice versa.

Tools like mandatory Key Facts Sheets and Comparison Rates are calculated over the full term of the loan making these methods even more unreliable if, like most people you refinance or pay your loan out early.

When you create your mortgage contest, you can score key features you want from your loan, your lender and your bidder (which could be the lender or it could be a mortgage broker).

Your scores for all key features are then tallied and this gives the Maximum Possible Score any bid can achieve.

Each time a key feature sought by you in your contest matches with a key feature included in a bid, the amount you rated that feature is added to the Bids Actual Score.

The Bids Actual Score is then divided by the Maximum Possible Score, the multiplied by 100 to produce Match, which is a percentage.

The higher the match, the better the fit.

If a bid scores 100%, it means that the bid has, according to the bidder, all the Key Features you have asked for.

Retail Savings (or Savings on RRP) is the cost difference between the TIC calculated on Lender Advertised Pricing for that loan with retail discounts and offers and the TIC calculated using the same information, but adding in any discounts, rebates or incentives offered by the bidder to win your business.

So if the lender normally offers you a discount of 0.7% p.a. off standard variable rate for your loan and bidders offer the same 0.7% off standard variable in their bid, there will be no Retail Savings showing for that deal (assuming everything else is the same too!).

Retail Savings are calculated using your nominated “Repayment” (Minimum or budgeted) and “Exit After” settings. So if you select an “Exit After” of 3 Years, the TICs and Retail Savings will be calculated for 3 Years only.

The time value of money is the principle that the purchasing power of money will vary over time and usually reduce mostly due to inflation.

The simplest example is petrol. Today you can’t buy even on litre for one dollar, however thrity years ago, you could by two litres. That means that, with respect to petrol the value of one has really reduced as you get less for the same amount.

The time value of money is the central concept in finance theory and it too has its limitations (after all, it’s only a theory).

The important thing for you to understand is that a dollar saved in 25 years time is likely to be worth quite a bit less than a dollar saved in the next year or so and likewise, a dollar spent today is likely to have cost you / bought you less than it will in the future.

Total Individual Cost or TIC is the total modelled cost of your loan with interest, charges, discounts and rebates calculated into a dollar cost, based on your loan amount, your repayment type, your equity, repayment type, repayment amount, loan term and exit.

Advantages:

1. Reports the cost in dollars and cents which allows simple value comparison.
2. Includes disclosure of fees and other variables so you know what’s in the mix and what might have been missed.
3. TIC reflects the increased/reduced cost of decisions like making minimum repayments versus a higher budgeted amount.

Disadvantages:

1. Does not include impact of Time Value of Money which means longer term differences may appear greater than they really are.

You should also be aware:

• the interest rates and fees and charges are those that apply as at the date of production of a bid by your bidder.
• the Total Amount Repaid and the Total Individual Cost do not include fees which are dependent on events that may not occur (for example late payment fees if you do not make repayments on time)
• Total Amount Repaid, Total Individual Cost and your repayments will change if interest rates, fees and charges change and if a different loan type, loan term, loan amount or security property value is used.

Total Individual Cost models the amount of money you will pay for a bid excluding the repayment of the money you originally borrowed. Total Amount Repaid is the combination of the TIC and your original loan amount.

It is important to understand that the way other organisations calculate the Total Amount Repaid and TIC or TIC equivalent should be essentially the same.

However flongle requires bidders to enter both known fees and charges and a maximum allowance for fees and charges you are likely to pay. That last bit is important. It means bidders must allow approximate amounts for hidden charges, even if they can’t work out the exact charge at the time of the bid. This means the TIC and Total Amount Repaid is likely to be higher than the amounts quoted by similar organisations because their calculations may exclude fees you are likely to pay, but the broker or lender does not want revealed before you’ve signed your life away.

Charges and rebates included in flongle’s TIC and Total Amount Repaid and itemised individually for each bid include:

• Valuation fees.
• Lender’s Mortgage Insurance
• Rebates and bonuses.
• Settlement Fees
• Loan disbursement fees
• Settlement Attendance

Flongle also requires bidders to nominate fees like Redraw Fees as well as Redraw and Extra Payment limitations and a Maximum Allowance for other fees. These are also itemised in your contest results.

Most organisations, including flongle do not factor in general transaction or penalty fees which may only become payable based on your own personal usage. You should ask your bidder to provide a Fees and Charges booklet that will cover these costs before you proceed with your loan application.

You should also be aware:

• the interest rates and fees and charges are those that apply as at the date of production of a bid by your bidder.
• the Total Amount Repaid and the Total Individual Cost do not include fees which are dependent on events that may not occur (for example late payment fees if you do not make repayments on time)
• Total Amount Repaid, Total Individual Costs and your repayments will change if interest rates, fees and charges change and if a different loan type, loan term, loan amount or security property value is used.