on 12% Home Loans

From: Rolf Latham

Hi Colin

ouch, seems a bit more than normal, but

The qualifying question you need to ask here is why the tennant/owner is willing to pay 12 % per annum, not that someone is "charging" 12 %

Is it perhaps that many "non-conforming lenders" with a government approved licence can get rates of up to 13 % ++ on mortgages with people who have had credit problems, and on an LVR of 75 % or less ?

If you cant get a normal mortgage (1 in 6 applicants) and if you were a renter and you could pay the same amount as your rent to a mortgage and pay off the property over 25 years wouldnt that make sense ? Regardless if the rate is 5 or 25 % ? There are some PR, moral and legal issues to be sorted for sure but I personally know people that would still be renting an are now buying their own place for no more than the rent they were paying.

Dont agree with the 12 % seems greedy BUT not knowing the details of the deal cant make that assumption

Seems to me that vendor financing fills a gap in the market that;s been there for a long time and will continue to bet there - rightly or wrongly.



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Reply: 1
From: Sergey Golovin

Maybe they are paying 12% instead of 6.5% to be ahead sort of speak. Pay more now and pay less later?

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