New loan product aims at struggling homebuyers

Font size :

Australian Mortgage Options has launched a new home loan in an attempt to lure homebuyers back into the market amidst falling housing affordability.

Zero20 is designed to reduce repayments by offering 20% of the loan at zero interest and with zero repayments. The remaining 80% is a treated as a normal home loan.

"This means you get an interest-free loan of between $15,000 and $400,000 with zero interest charges and zero repayments for up to 25 years," explained Robert Projeski, managing director of Australian Mortgage Options.

The Zero20 home loan, which is essentially two loans in one, is similar to a product introduced by the Blair government to attract buyers back to the UK property market in late 2006. However, unlike in the UK where the lender and borrower share in the upside only, Projeski says both the lender and the borrower will share the upside as well as the potential loss of property value.

For example, if a property bought for $500,000 using the Zero20 Home Loan later sells for $480,000 - that is a $20,000 loss - then the interest and repayment-free component of the loan (originally $100,000) is reduced by $10,000, being 50% of the loss. The borrower has not only had a $100,000 interest and repayment-free loan, but now only has to repay $90,000 - not $100,000. If the property was later sold for $600,000, then the purchaser retains 60% of the profit share gain or $60,000 of the capital growth. Put simply, the upside or downside of the capital growth is shared.

Projeski expects the new package will benefit a wide range of buyers who are struggling to get a leg up in the property market as property prices and interest rates continue to rise.

"I've been in the industry 20 years and this is the most innovative product to get Australians into home ownership sooner," said Robert Projeski, managing director of Australian Mortgage Options. "In a nutshell, this loan reduces repayments, you can borrow more and get the property and lifestyle you want today."

Projeski believes the loan is perfect for people wanting to upgrade their existing property, or those wanting to refinance their existing loan, reduce loan repayments and ultimately improve their lifestyle.

Repayments and borrowing capacity on Zero20 is calculated on a lower amount because of the 20% zero interest and zero repayment component. This makes the loan more affordable overall and allows people facing more expensive real estate prices to get into the market sooner.

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Wednesday, Sep 20, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords