Split Equity Housing Loan

[Bluey]

This item in Crikey.com.au caught my eye:

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6. HENRY THORNTON ON HOUSING AFFORDABILITY

The proposal to help housing affordability by allowing institutional shared equity investment received lots of press coverage over the weekend. It is going to be considered in Canberra very soon. It is a genuine finance innovation. But what is it all about? Is it a good idea? Henry Thornton starts to review the issues, and endorses a thorough investigation. See

http://www.henrythornton.com/article.asp?viewArticleID=594

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Lots of info and links there on a proposed financial product that may make it much more affordable to get into property, or maintain the bubble with a fresh round of demand depending on who you talk to.

Effectively the proposal means that you could go into partnership with a financial institution to buy residential property. You pay between 75% and 50% of the price, the bank pays the rest and keeps the equity.

 

[ramjet]

not sure how many people(particularly 1st home buyers) would be interested in going partners with a bank or other financial institution. but i think it has some merit - probably needs a fair bit of tweaking.

 

[Pessimistic]

Not sure bluey but it indicates the Libs want to stay in power (or get in power in the states) by extending the housing boom. Prices will continue to go up so you might end up owning half the WC rather than all of it with a conventional mortgage.

 

[Shinboners]

I just find it ironic that the Liberals are supposed to be championing the free market and yet, they bring in policies (like the first own homers grant, and now this split equity housing loan) that distort the market and make the bubble bigger - and the bigger the bubble, the bigger the crash.

 

[BSA]

Hmmmmmm

In times gone by ya worked hard all ya life and ended up owning a modest house on a plot of land spmewhere in the 'burbs.

Nowadays it seems, ya work twice as hard and end up owning HALF of that.

The other half is owned by the bank, presumably the same bank you borrowed the mortgage off in the first place.

So, 25 years later you've paid the principal and as much again in interest to the bank and the bank STILL ends up with half the property anyway !!!

Am I missing something here ?

It sounds like a sh*thouse idea IMO

cheers

 

[Shinboners]

Originally posted by BSA
Nowadays it seems, ya work twice as hard and end up owning HALF of that.

The other half is owned by the bank, presumably the same bank you borrowed the mortgage off in the first place.

So, 25 years later you've paid the principal and as much again in interest to the bank and the bank STILL ends up with half the property anyway !!!

Am I missing something here ?

Missing something? I thought it was quite obvious.....buy shares in the banks.