What are your opinions on this guys??
from this month's Australian Property Investor, there is a new product where they offer, your downpayment of 20% interest free. The catch is that when you sell, 40% of the profit goes back to the them.
My strategy would be to get as much positive cash flow from houses as possible. With an equity loan, and a 40 year loan, it would be quite good as:
1. you can buy a house with no money down.
2. you dont pay the equity loan back until you sell; and if its positive cashflow, you can hold it for a half a century and still not sell.
3. 40 year loans will have less repayments per month; thus making it easier for +CF.This plan would work pretty well provided that in the equity loan they dont force you to sell after X number of years.
What are your thoughts on this?
Havent seen the article but i assume you are referring to the Shared Equity Scheme offered by Adelaide Bank / Rismark.
If this is the case then to correct a couple of points:
1) It is not available to investors at this stage.
2) It is available on a maximum 25 year term after which the debt needs to be repaid.
3) Interest only loans whether are for 20 / 40 years have the same loan repayment so by making the loan a 40 year loan does not make the repayment cheaper.Richard Taylor | Australia's leading private lender
Hey Richard,
Thanks for replying. A few people have seen this but havnt done anything.
The article doesnt say, but it looks like 40 year loans are both principal and interest. it wouldnt make much sense for a 40 year loan to have the same monthly repayments as a 20 year loan though.
and i thought that the shared equity scheme was offered by more than just adelaide bank? damn!
Just my Thoughts,
The max loan that I would go for would be a 25 year loan, even a 30 year loan is to long, the differance between the monthly repayments of a 25year loan and a 30 year loan are so minimal, Its not really worth the interest associated with the extended loan term,
you will pay an extra $33,000 dollars in interest per $100,000 lent if you take out a 30year loan instead of a 25year loan, Thats a big differance when the repayments for the 25year loan are only $8.70 extra a week.
There is such a big saving to be made by cutting your loan down by five years. Who would of thought the repayments were so minimal. I was thinking of doing a 30 year loan but you have completely changed my mind.
Thankyou so much!
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