| |
By using an Zero20 in conjunction with a traditional home loan, you can afford to purchase up to a 25% more expensive property (subject to all the necessary credit approvals and compliance with the guidelines set out in this website)! The following example explains how... |
|
| An Zero20 could be used to enable Jenny and Matt to purchase a bigger house in a better suburb to accommodate their growing family. |
| They know that they would have approximately $75,000 of equity from the sale of their existing apartment - enough to cover the purchase costs and still have a $50,000 deposit to put towards their purchase. |
| BJenny and Matt can afford to borrow $375,000 using a traditional home loan making repayments of $2,845 per month. This would allow them to purchase a home for $425,000. But by adding an Zero20, they can purchase a more expensive home and make the same loan repayments. Here's how: |
| Traditional home loan only |
| Property value: |
$425,000 |
| Deposit: |
$50,000 |
| Traditional home loan (88% of property value): |
$375,000 |
| Lenders Mortgage Insurance premium: |
$5,172 |
| Monthly repayment required: |
$2,845 |
|
| Adding an Zero20 for a more expensive property |
| Property value: |
$531,000 |
| Deposit: |
$50,000 |
| Need to fund: |
$481,000 |
| Zero20 loan percentage (20% of property value): |
$106,000 |
| Traditional home loan (71% of property value): |
$375,000 |
| Lenders Mortgage Insurance premium: |
$6,175 |
| Monthly repayment required: |
$2,845 |
| Adding an Zero20 allows the purchase of a 25% more expensive home. |
| Note: This example excludes application fees and other fees associated with the loans such as valuation fees, account keeping fees, transaction fees and lenders mortgage insurance (if applicable) as well as transaction costs associated with refinancing a home loan such as stamp duty, government fees, conveyancing fees and stamp duty on lenders mortgage insurance. The example assumes that the Zero20 loan is for 20% of the property's value at the outset and that no default interest is payable at any time over the term of the Zero20 loan. The actual Zero20 loan may be for less than 20% of the property's value and the outcomes may vary considerably if default interest becomes payable. The example assumes that the traditional home loan interest rate is 7.80% p.a, the loan term is 25 years, all principal and interest payments are made on time, the only repayments made are the required repayments - that is, no additional repayments or redraws are made, and no event of default has occurred and default interest is not incurred at any time during the term of the loan. Please note that these assumptions may not apply in your circumstances. Interest rates available on a traditional home loan may be lower than the interest rate on a traditional loan taken in conjunction with an Zero20. Ask your lender to compare these costs for you, while taking your circumstances into consideration. |
|
The illustration above shows that by using an Zero20 in conjunction with a traditional home loan and agreeing to share any future increases in the value of their property, Jenny and Matt have been able to purchase a 25% more expensive home worth $531,000 and are still making the same loan repayments.
For any additional assumptions used in calculating this example please refer to the assumptions page.
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.
|
|
|
