Equity Financing - What is it all about?

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

There has been a lot of publicity recently both in the papers and on television, namely Today Tonight, about a “revolution in Home Loans”. I foreshadowed this in March 2006 when the idea of the loan was first floated. After a lot of tweaking and arguing the product is finally on the market, and is only available through especially accredited brokers and loan writers.

I am happy to announce that I am one of those!

The ACCC, the funders and lenders and ASIC have imposed very strict conditions on the loan details and I am not permitted to disclose specific details except in person.

You can however look at the official details by clicking here.

In summary, the loan will allow borrowers to pay less per month and/or borrow more.

After you have read the brochure contained in the link, you can phone me on 1300 133 193 and I will explain all the conditions and requirements.

Failing that, leave a comment below and I’ll reply to you as soon as possible.

No Deposit Home Loan

A no deposit home loan is now available in Australia to assist new home buyers priced out of the market through the difficulty of saving an adequate deposit. The old standard was that you had to save at least 5per cent of the purchase price, plus have more to pay for the other costs like legal fees, Bank, and Government charges.

Not any more. Banks and lenders have come to the aid of these struggling borrowers with a raft of new products including a no deposit home loan.

The no deposit home loan needs to be explained in a little more detail however, before you get too excited. The fact remains that you will probably still have to have some savings, but with the assistance of the First Home Owners Grant, it all becomes much easier.

Let’s take some examples. Say you are looking to buy a home valued at $400,000 or $300000. Now, for borrowers wanting to borrow the maximum 100%, the costs would be as follows. Please bear in mind that Stamp Duties vary from State to State and the following applies to Queensland first home buyers only. All figures are approximate and have been rounded, and not to be interpreted as a binding quote or advice:

Purchase Price $400000
Purchase Stamp Duty $ 2800
Legals (approx) $ 1500
Mortgage Stamp Duty $ 1271
Lenders Mortgage Insurance $ 10545
Govt Transfers $ 634
Registration fees $ 112
TOTAL $416862

OR

Purchase Price $300000
Purchase Stamp Duty $ NIL
Legals (approx) $ 1500
Mortgage Stamp Duty $ 860
Lenders Mortgage Insurance $ 6126
Govt Transfers $ 396
Registration fees $ 112
TOTAL $308994

So, the ‘real’ price you pay for your new $400000 home is actually closer to $416900. So where will your money come from?

The no deposit home loan means the bank will advance you $400,000. The First Home Owners Grant will give you $7000 which means you will have to find about $10,000 of your own money. Some people choose to borrow this from parents, family or as a personal bank loan.

In the case of a $300000 purchase, the figures are different. In this scenario, the ‘real’ cost is $309000. With a no deposit home loan of $300000 and the First Home Owners Grant of $7000, you will only have to save $2000.

After you have taken care of the cash side all that’s left is to satisfy the bank that you can repay the loan and away you go!

Remember that each bank has their own special criteria for assessing loans and you can expect to find wide variance in how much they will lend you. You need access to special software to get the comparisons right, and to make sure you get the loan options you require to suit your personal circumstances.

Call me on 1300 133 193 for any details or if you want other calculations or information.