| |
By using an Zero20 in conjunction with a traditional home loan, you can significantly reduce the upfront and ongoing costs of purchasing a new property (subject to all the necessary credit approvals, etc). The example below shows how... |
|
| Jack and Adrian want to purchase a home for $400,000. They have a $20,000 deposit and sufficient additional funds to meet most of the costs associated with the purchase, such as stamp duty on the transfer and conveyancing costs. |
| They could borrow $380,000 using a traditional home loan which would require them to repay $2,883 per month in regular home loan repayments or they could take advantage of an Zero20 to reduce their monthly repayments. Here is how an Zero20 could work for them: |
| Traditional home loan only |
| Property value: |
$400,000 |
| Deposit: |
$20,000 |
| Loan needed: |
$380,000 |
| Traditional home loan (95% of property value): |
$380,000 |
| Lenders Mortgage Insurance premium: |
$7,471 |
| Monthly repayments required: |
$2,883 |
|
| Adding an Zero20 to make purchasing a home affordable |
| Property value: |
$400,000 |
| Deposit: |
$20,000 |
| Loan needed: |
$380,000 |
| Zero20 (20% of property value): |
$80,000 |
| Traditional home loan (75% of property value): |
$300,000 |
| Lenders Mortgage Insurance premium: |
$4,652 |
| Monthly repayments required: |
$2,276 |
| Adding an Zero20 reduces the repayments required on a traditional home loan by up to 20%. |
| 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, Jack and Adrian have made their purchase more affordable by reducing:
- their regular monthly home loan repayments by $607 a month; and
- the Lenders Mortgage Insurance premium by $2,819.
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.
|
|
|
