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Why is the lender of an Zero20 willing to receive no repayments at all during the Zero20 loan term? |
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| The money raised by the lender to fund the Zero20 is sourced from investors who want to obtain very long-term, 25 year exposures to residential real estate. The capital the lender has raised is sourced on the basis of these investors making 25 year commitments to residential property. However, one must understand that these investors will have exposure to a "portfolio" of thousands of Zero20s. Accordingly, some Zero20s will be repaid earlier than others. The average life of an Zero20 is likely to be less than 10 years. With exposure to thousands of loans, the investors in the portfolio of Zero20s will therefore expect to see cash-flows realised consistently over time throughout the course of the maximum 25 year loan life. So while there will be no interest or principal repayments made by the borrower under an Zero20 until they decide to repay the entire amount owing, the investor in a portfolio of Zero20s will see cash-flows realized over the next 25 years as individual borrowers elect to repay their loans. |
| Can I take out an Zero20 without a traditional home loan? |
| An Zero20 is only available in conjunction with a traditional home loan. The product has been designed to allow you to reduce the burden of a traditional home loan or to purchase a more expensive property by using both products. |
| Monthly interest repayments are not made during the term of an Zero20. Can this change during the life of the Zero20? |
| No, the terms & conditions do not contain a right.at a later date. However, if you are in payment default, default interest will apply at a rate of 2% above the ABL SVR. This rate can change and will usually only occur in line with .published by Adelaide Bank. |
| Does having an Zero20 stop me from paying extra off my traditional home loan and later redrawing those extra repayments? |
| You will be able to make extra repayments off your traditional home loan in the same way you could if you did not have an Zero20. Having an Zero20 does not change this. You can also redraw any extra repayments you have made either by using on-line redraw or the manual redraw application. Subject to the terms and conditions of your traditional home loan. |
| What legal documents will I get when taking out an Zero20? |
| You will receive a Loan Offer, Zero20 Terms and Conditions, a separate Zero20 Disclosure Document that explains the difference between an Zero20 and a traditional home loan alone and a mortgage over the property to secure the loan. You will also receive a complete set of documents for your traditional home loan. Both sets will be packaged together by the Solicitors so customers receive them at the same time. |
| If I cannot make payments off my Zero20 why do I need statement? |
| Zero20s are regulated under the Consumer Credit Code. As a result we must provide you with a regular statement of your loan account. In most cases the statement will simply detail their loan balance outstanding and their security property details. If however the Zero20 has been or is in payment default you may be charged default interest. The statement will then include details of the default interest amounts debited to the loan monthly as well as any other enforcements costs. |
| What if my house is destroyed by fire? |
| You are required to maintain building insurance over their property at all times and have both lenders interest noted on the policy. Failing to do so is an event of default. |
| Can I purchase a property and later subdivide a portion of the land for sale? |
| No, the Zero20 must be repaid in full if you sell or transfer all or part of the property that secures the Zero20. This would include payment of any appreciation payment. |
| Does the quality of the property affect my ability to obtain an Zero20? |
| When the property is valued, the valuer will make comment on the quality of the property. Where the quality is poor or if there are signs of some adverse circumstances such as termite damage, asbestos or poor workmanship, a more rigorous valuation will be required and the Zero20 may not be approved. |
| How do I know if I will be better off with an Zero20? |
A number of factors will influence whether you will be better off using an Zero20 with a traditional home loan than a traditional home loan alone. They include interest rate movements, the change in property values over time and how long you have the Zero20 amongst others.
The Disclosure Document you receive with your Zero20 contract explains these factors and warns that the appreciation payment could be substantial (and more than you would repay using a traditional home loan alone) depending on how much your property increases by.
If in doubt you should obtain independent legal and /or financial advice. |
| What happens if I do not get consent to my renovations? |
| You will not be eligible for an improvement amount if you do not obtain consent for your renovations or home improvements before you commence. This means that the amount you repay on the Zero20 in due course will be based on the full value of the property at the time and not the value less the improvement amount. |
| Why don't I obtain an improvement amount if I tell you about the renovations later? |
| The improvement amount is the difference between the value of the property before and after you carry out the renovations. If you do not obtain consent to the improvements before you commence we will not be able to obtain a starting valuation and therefore will not be able to measure the increase in value attributable to your renovations. |
| What happens if I do four separate renovations for a total value exceeding $20,000? |
| Each renovation or home improvement project carried out must be for $20,000 or greater and comply with all requirements to be eligible for the improvement amount. A number of smaller renovations will not collectively qualify. You would be best advised to do a series of projects as one to ensure they qualify. |
| What do I do if renovations will take longer than 6 months? |
You can request an extension of time to complete your renovations if work is delayed. Depending on the duration of the delay, you may be required to obtain a further valuation before consent will be granted this will usually only occur in extreme circumstances. You should apply for consent as close a possible to the date a builder would be available to commence work.
If you have not notified us that the renovations are complete 5 months after consent is granted, you will receive a reminder letter advising that you will need to apply for an extension if work is not completed within the next month. |
| What happens if I disagree with a valuation of my property? |
The original Zero20 loan amount will be based on the lesser of the purchase price of the property (if applicable) and the current value of the property valued by an approved panel valuer. If you are not happy with that value, you can choose not to enter into the Zero20.
If you disagree with a valuation during the life of the Zero20 (including at the time they are repaying the Zero20) you can request a second valuation (at your cost). The valuation must be conducted by a panel valuer in accordance with the Zero20 valuation requirements. The terms and conditions of your Zero20 and the disclosure document outline the dispute procedures and how the value is agreed if this occurs. |
| Why do I need to contact by Broker before repaying their Zero20? |
The payout figure for a traditional home loan is readily available. The payout figure for an Zero20 requires a valuation of the property to be conducted so that the appreciation payment or depreciation allowance (if applicable) can be calculated.
You must contact us before you want to repay the Zero20 to allow us to obtain the valuation and explain the process to you. It also ensures that settlement is not delayed while a valuation is obtained. |
| Is the property sale price controlled by Rismark in any way? |
| The only requirement is that the sale be bona fide and at arms length; you cannot for example sell your property to a relative for a price lower than market value. You are required to provide a copy of the sale contract once executed and a valuation of the property to confirm market value. |
| Will renovations affect the maximum credit increase or refinance amount I can get? |
| The valuation we obtain before renovations commence will be done on a cost to complete basis. The completed value can be used to determine the maximum amount available on a traditional home loan under the "refinancing formula". Larger renovations may require progress payments from the traditional home loan; as is the case with any standard stand alone traditional home loan. |
| What happens if my Zero20 loan term reaches 25 years? |
| 6 months before the loan expiry date, you will receive a reminder letter advising you that the Zero20 is about to become due for repayment. It will recommend that you contact your accredited lender to discuss your options for repaying the amount due. A further reminder will be sent 3 months before the loan expiry date. A valuation will then be conducted to determine the repayment amount; this will include the appreciation payment (or depreciation allowance if applicable). |
| After making an offer on a property are there conditions I must advise the agent / vendor? |
| After making an offer on the property you need to advise that the offer is subject to finance. This is important when you are looking to use the Zero20 to buy a more expensive property than they could with a traditional home loan. |
| We strongly recommend that you obtain independent legal and financial advice in relation to this Zero20 loan prior to entering into the Zero20 loan contract. |
Please carefully read and review the Zero20 Disclosure Document. This website does not take into account your personal objectives, financial situation, or particular needs. You should obtain a copy of the Zero20 Disclosure Document and the Zero20 Terms and Conditions Booklet and consider them before making a decision about whether to enter into a Zero20 Home Loan.
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