Credit provider fee for Perth wrappers - Dale?

[WebBoard]

Reply: 2.1.1.1.1.2.3
From: Susan Pope


Hi Michael,

Interesting point to bear in mind. Thanks.

Regards

Susan

 

[Mike]

Reply: 2.1.1.1.1.2.3.1
From: Mike .


Hi Susan,

I got a reply from Jeff from both these e-mail addresses:

[email protected]
[email protected]

...........................................................
Hi Mike,

Ok, the situation over here is that to be a wrapper in WA you have to get a credit provider license. I don't
think the cost of the application is high, but the requirements can be stringent (in terms of the ratio
assets/debt that you have to have to qualify).

The application is heard by the credit tribunal, which will determine if you are fit to be a credit provider.

One challenge to overcome in the Nanny State is that the Department of Employment and Consumer Protection
(the ministry of fair trading) may (and will) oppose your application on the basis that the service may be
detrimental to vulnerable consumers (borrowers).

The Ministry of Fair Trading has already warned consumers of the risks involved in buying a house
through a wrap arrangement. Thus, it has tainted the business as a potential scam (I'm not happy about that
at all).

See the article in the following link:

http://www.fairtrading.wa.gov.au/fairbytes/2001/100701/wrapper.shtml


For a copy of the application form and accompanying information go to:

http://www.fairtrading.wa.gov.au/business/index.shtml

... and get the "Credit providers (excluding banks, credit unions and building societies)" form and pdf
document.

I hope this information gives you a good start. Let me know if you're successful obtaining a license ;-)
...........................................................

Susan, before you jump in and get a license, make sure that the structure that you use requires one. As I said earlier, if you are using Lease Options I doubt that you require one.

The other issue is the FHOG: In a post to Wealthtipsonline (Steve McKnight's forum) Jeff said, "For instance, I've learnt that in WA you cannot get the $7,000.00 grant from a new homebuyer until the whole mortgage has been paid (in 25 years time?!)."

Is it still an advantage doing a wrap using the instalment contract method if you don't get the FHOG at the front end?

Regards, Mike

 

[WebBoard]

Reply: 2.1.1.1.1.2.3.1.1
From: Susan Pope


Hi Mike,

Thanks for your effort in contacting Jeff for me - much appreciated.

You said:

"... Jeff said, "For instance, I've learnt that in WA you cannot get the $7,000.00 grant from a new homebuyer until the whole mortgage has been paid (in 25 years time?!).""

I'm not sure what Jeff means by this as, looking at the paperwork accompanying the WA FHOG application form, it states:

"When will the Grant be paid?

When lodging through the State Revenue Department the Grant will be paid:

. in respect of an established home after the applicants' interest is registered on the title; and ..."

I also personally know a couple of WA people who successfully received their FHOG entitlements last year (and their mortgages are still not paid off!). Naturally they are not wrappees or optionholders. Perhaps there is only FHOG discrimination against "credit providers" other than banks (who don't need a credit provider's licence)!!

You said:

"Is it still an advantage doing a wrap using the instalment contract method if you don't get the FHOG at the front end?"

Do we think this FHOG will still be available for a long time to come?

How many prospective clients would not qualify for the FHOG anyway - or be prepared to "miss out" on the FHOG to secure a house they could not otherwise buy?

Do I think it is still an advantage doing a "wrap" without the FHOG at the front end?

Depends on how keen the parties are - but, yes, I think it still could be advantageous. It certainly wouldn't stop me, although I know I have ALOT to learn before I do.

Thanks again Mike for all your help and feedback.

I certainly won't be applying for a credit provider's licence - however thanks to all comments & suggestions received. At least I feel I know more about this subject - which can only be useful in the long run.

Regards,

Susan