Here's an article from Fridays Herald Sun. I think the intension is to assist low income and first home buyers.
Wizard homes in on equity Bruce Brammall 01oct04 http://www.heraldsun.news.com.au/common/story_page/0,5478,10932430%255E664,00.html
POTENTIAL homebuyers prepared to share profits with a lender now have a new product to get them into the property market.
Wizard Home Loans yesterday unveiled its Head Start Shared Equity loan, which will lend more than 100 per cent of the purchase price to borrowers in return for a share of the equity down the track. The Australian-first loan is Wizard's response to a government proposal for sharing equity as a way of dealing with runaway house prices.
It is aimed at helping people with good incomes and credit records, but poor savings history, into their first home.
Wizard, in conjunction with Mobius Financial Services, will offer up to 105 per cent of the purchase price to a borrower to cover the extra fees involved in buying a house, such as stamp duties and conveyancing.
A higher interest rate is charged for the product.
But after a few years, the borrower can refinance to a cheaper loan, which is when the equity sharing cuts in.
If the borrower wants 102 per cent finance, then 20 per cent of the increased equity would go to the lender, Wizard.
If the loan is for 105 per cent, Wizard would share in 50 per cent of the capital gain.
And if the property has not improved in value, the lender will get nothing.
Wizard executive chairman Mark Bouris said the product had been 12 months in the making.
