Shared Equity loans – such as the one been offered through the Adelaide Bank – seems like a good way to acheive positive cashflow due to the reduced repayments from not having interest to pay. On face value I think it could definitley be used as a good strategy to create positive cashflow.
Has anyone used this form of finance for investment properties as yet?
Id really like to hear people's opinions on these loans and if others think they have potential.
I think you'll find they aren't available as yet for investment properties. Here's a link to an article about the new Shared Equity from Richard Taylor:
http://www.propertydivas.com.au/7ProfServ/Professionals.aspx?cmaid=3b9d5965-4e9a-4d69-9254-a9dde01786e5&cmstat=ProfallThey are available you need to understand that there are some hitches though, scroll back through the posts there is already a fair amount written on these loans
At present thay are not available for investment properties and only available for owner occupiers.
I am told that they investor facility will be available within the year.
Richard Taylor | Australia's leading private lender
They are the biggest scam out! I am dead against them and can't believe that they have passed legislation and actually offered to people.
Positive cashflow helps people build a portfolio faster but true money in real estate investing is made through capital appreciation.
In SA, wrapping is outlawed and now there is a bill to reduce the number of lease options going on (although I doubt it will go through). Both these creative techniques allow people to build equity even before they own the house and they are not allowed.
Yet the state governement is allowing these ridicoulous scams like shared equity. What a joke!!!! Sorry I think they are an insult to everyones intelligence and I don't agree with them
Hi
Seems alot of people shoot off at the mouth before thinking about this product.
you have got to make it work in your favour..
for instance we are using it while my wife is having kid/kids and then refinance after 3 years
Yes agree not for everyone and doesn't fit our situation long term either but will work in a flat market also.
Steve
We have had this conversation many many times. I agree a lot of people type before they think.
Certainly not for everybody but it is funny how people said that when the lodoc loan came out and now look at the popularity, same with 100% loans (terrible i hear you say if you cant save a deposit you dont deserve to be a home owner).
The SEL or EFM is a great product used correctly and for the right type of clients.
Must admit each client who has enquired after the Today Tonight programme has understood the + and -'s of the product.
Richard Taylor | Australia's leading private lender
what are the implications of these loans going to be for house prices? I can only see that these loans will push house prices higher as people see the possibility of borrowing more . Also people who perhaps wouldn't have been able to afford to pay off a loan before get in and create increased demand for houses (at least the few that get in early before house prices increase to compensate). That leaves people who do want to use standard loans facing much higher repayments and could potentially result in price hikes in the postcodes allowed that would leave people taking out the same size standard loan as before + the shared equity loan. For someone who is currently renting but intends to buy in about 6months time this is a scary thought and I hope the marketing campaign that will invariably surround these loans as more finance providers jump on the bandwagon does not take off just yet.
Certainly when they were first offered in the UK by many mainstream lenders they did not drive up house prices.
That was some 20+ years ago and over the longer term seem to have had little impact on home loan affordability.
Richard Taylor | Australia's leading private lender
The "won't this push house prices up" argument trotted out above applies equally to any innovation that allows people to borrow more or buy more. Mortgage insurance, improved serviceability ratios, inclusion of rental income, high LVR loans, Lo Doc, No Doc, guarantees, cross-collateralisation and anything that pushes an interest rate down rather than up – under this logic- drives house prices north
The irony is that this very forum is designed to assist people to do just that.
Therefore, this forum is driving house prices up.
It is therefore in everyone's interest that we shut it down
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