Shared Equity Scheme is here

[Qlds007]

Oh well looks like the 1st March is the launch date for the new loan product.

It will run like this

1) 80% lend from a Bank with interest charged as normal and standard loan repayments.
2) 20% lend from a private superanuation fund with NO interest charged whatsover throughout the term of the loan and no repayments made.

In the event of the sale the 2nd mortgagee takes 40% of the gain made in the property and you retain 60% of the gain. There is no timeframe restriction for this.

The 2nd mortgagee also shares in any loss made on the sale of the property.

LMI is payable on the 2nd mortgage only however given the lower loan amount is a relatively small payment.

Certainly will spice up the market and provide a launching pad for those clients looking to get into a property which on paper is beyond them in serviceability or where maybe the wife is giving up work due to forthcoming pregancy etc.

Very postcode restricted with NO regional lending whatsover and a max number of loans and value in each post code region.

[sailor]

Which super funds will get a bite at this cherry? Could I use funds from my SMSF?

[Qlds007]

Hi sailor

Regretfully these are large industry funds that will be lending the money but in saying that there is nothing to stop you doing it yourself.

We have done many similar loans using our SMSF.

[sailor]

Thanks Richard...could I use my SMSF to lend money to my HBT to buy a property? I'm just asking cos I have an awful lot of money tied up in SMSF, but insufficient to go and pay cash for an entire IP in the SMSF's name.

[Qlds007]

Regretfully not these days.

Prior to 1999 then yes that type of arrangment was allowed.

There is nothing to stop you assisting a purchaser (arms length transaction) by providing him / her with a 20% deposit and charging interest or agreeing to roll that up until the property is sold and take a share of the profits.

[Smile]

Who pays for upkeep of the property and out goings, rates etc?
Is it shared 80 - 20 ? I doubt it!

[Qlds007]

No as you are charged no interest on the 20% or in fact make no repayments for 25 years then cover the rates and upkeep.

[BV]

Richard,
Is this available in all states
and how does it work?
Does the bank offer this as a package deal
or does a purchaser himself have to find the lender and a super fund willing to participate?
cheers

[grossreal]

hi richard
can you refinance using this.
and will they no doc/lo doc 70% and they cover the 30%, now thats a product.
if you use one of these products and you wait for say 10 years can you equity lend against the equity growth without selling and will the mezz funder( I will call them mezz for this post) allow you to access the built up equity.
is it only resi or are they looking at comm.
if you have the 80% lend are they an attachment to your 80% lend or do you need to organise the 80% thru them or a group attached to them.
is there a time frame to sell and whats the control that they wish to have on the investment.
is the product here as yet and is it in sydney
I would be very interested in what there criteria is.
for me its the same as vendor finance back and that is the most profitable part of the deal as its the profit part and its a wonder why the others have not moved into that market.
I will watch with interest this post.

[grossreal]

hi Qlds007
is the profit split at the end the profit less holding cost so if the 80% is a negative say 5k and you hold for 5 years so you have a neg 25k but then you sell and you have a profit of 200k and the split is 60/40 thats 120/80 but if you have 25 k losses then the profit is 175k and split 60/40 of the 175k.
I would be interested in the split of costs as well as the split of profit.

[Qlds007]

Gross

No only full doc for owner occupiers.

But first deal i have done was for $2M for clients buying on the water at Noosa. They could only service $1.6 but really wanted this house.

So we did it by way of an EFM and they are wrapped.

How much more will a $2Million house go up over a house with a purchse price of $1.6M is to be seen but it appealed to them not having to make repayments or be charged interest on the $400k.

Yes product is here and is available in Sydney (Post code restricted) but only to O/O.

BV to answer you question. It works in all States except Tassie but is very post code restrictive and has a max purchse price in each acceptable area. Let me know the post code you are looking at and I can tell you. No the deal comes a package 1st and 2nd mortgagee in one.

[BV]

Hi Richard,
Many thanks,
Will they do postcodes 2206, 2208, 2171, 2173, 2763 ?
cheers

[Qlds007]

BV

Yes and No. The maximum loans for each area are as follows:

2206 = Not acceptable
2208 = Not acceptable
2171 = Yes acceptable Max purchase price - $629,587
2173 = Yes acceptable Max purchase price - $556,326
2763 = Yes acceptable Max purchase price - $622,128

[pmcintosh]

There is already another shared equity scheme operating via Aussierealty.com with no money down, borrow total purchase price interest only etc. Check out their website and any comments would be welcomed. Also seems to be OK for investors as well.

[BV]

Richard
I guess this product is now likely to push prices up in the suburbs it's offered in. Hopefully other lenders will come out with similar products soon.
Cheers