Yes, HRL will pay mortgage brokers a commission to refer MA buyers to our website application form at http://mortgagealternative.com.au/register/ provided they complete the box on the form inserting their name and mobile number. Brokers are encouraged to assist home buyers to consider MA and to seek independent professional advice. The broker must be Assquire licensed by Haigslea Residential Limited at the date of the referral. The commission is paid on a notional mortgage of 75% of the unindexed base value of the property. There is no trail.
MA’s management team are looking to work with mortgage brokers who genuinely want to seek the most suitable home financing option to meet their customer’s requirements and objectives, whilst also valuing the opportunity to open a new commission stream for themselves. MA produces a unique new channel of MA buyers that either cannot get mortgage finance, or who can, but prefer MA’s unique features and benefits to those usual features of a traditional mortgage, in their personal circumstances. The lower share of losses explained here is compelling for a home buyer, should a buyer need to exit in a down market, compared to a mortgagor’s position.
Features such as no need for a parental guarantee, the certainty of payments, locking the home price now at a pre-agreed 10 year price, no mortgage insurance or other upfront costs, ease of exit and greater peace of mind with no mortgage debt for up to ten years.
The key benefits compared to a conventional mortgage lend up to 97% less LMI of around 2.8% on an average $500,000 home at 5% deposit include:
- Mortgage Alternative (MA) does not require LMI at all, so there is no requirement necessarily for 5% genuine savings. We judge each case on its merits, so all or part of the deposit may come from parents or grandparents. Each case is credit assessed on all facts and circumstances in the MA Buyer’s application;
- MA’s 5% deposit (can be as low as 4.5% in some Australian States for homes under $500,000) includes the MA buyer’s stamp duty. Buyers do not need to independently fund that from savings or from elsewhere. This is especially important for buyers who have owned an apartment or home before, and especially so if the property they prefer is $550,000 or more, where stamp duty in Qld can begin to hurt previous home owners trading up or wishing to live closer to the CBD.
- MA simply gets buyers into their dream home sooner and out of the uncertainty of tenure of the private rental market, but with no exposure to future interest rate rises for up to ten years – as the MA buyer has no mortgage in the first ten years.
- Parents no longer need to go guarantor or offer family pledges to a mortgagor, as MA buyers can elect to terminate the contract and simply move out in adverse personal circumstances, returning the home to the Assquire investor (who remains on title, as per usual, until buyer settlement.
- At just average 5% pa actual capital growth over the 10 year MA mortgage incubation period up to settlement, a buyer can accumulate up to a 30% deposit when they settle.
We believe many real estate vendors and current landlords would welcome the exposure of their property to this new buying channel on an unconditional finance sale contract, with a ten year lease and that may present a useful synergy for mortgage brokers and their real estate agency networks.
History of Product Market Sounding
MA is an innovative new financing product launched softly in Brisbane in research phase, on December 20, 2013, into the consumer market via Facebook and only to Brisbane city residents. That soft launch was extended (again in research phase) in early March 2014 to the city of Melbourne for greater geographic diversity of MA buyer response, as we extend and broaden our research into customer demand. The response proved demand and allowed us to test our online application systems and processes, and refine the product offering for feedback received.
The Haigslea Residential Limited management team is now accepting live applications and are currently actively training and accrediting early distribution channels. HRL are preparing for the introduction of wider distribution channels currently, having tested its online Expression of Interest (EOI) process over the early months of calendar 2014 and processing the first Brisbane registrants successfully through Part One of the research phase registration process, including the early pre-qualifying stages of a credit assessment process.
For institutional capital to be applied on a timely basis to parties “presold” on MA, we are seeking to first run with individual residential property investors (many current landlords) who can live anywhere in Australia, but invest as an Assquire investor in homes now offering accelerated stable predictable yields in Brisbane, then Sydney and possibly Melbourne – on the basis of a matched credit prequalification from an MA buyer and a desired home listed for sale at http://assquire.com.au/property-listings/.
We see that potential MA buyers and vendors looking/living in the same postcode will likely be best attracted by real estate agents and mortgage brokers working independently with HRL’s team or together to bring MA customers to our mortgage alternative website to apply on line, be prequalified, and then the search for a home that matches both their needs and the Assquire investor’s or Fund’s requirements.
Matching these people to a home can be progressed ultimately by facilitating the future provision of approved housing stock on our website (http://assquire.com.au/property-listings/), and/or through buyer’s agents and real estate agents working together in the early stages of the business to negotiate an agreed price, having regard to the Fund’s panel valuation or HRL’s panel valuation (a market valuation, not a bank finance valuation). This is imperative to protect MA buyers from inflating at 1% to 2% pa under the Assquire model a price that is simply not supportable by those skilled in the art of market valuation. This builds confidence for MA buyers in the buying process with MA and underwrites the integrity of the patented Assquire system.
Vendors and Assquire investors are free to negotiate a price independent of this for optimum vendor price in their sale and purchase transaction, but the Assquire investor’s pricing is constrained by market valuation in the transaction with the MA buyer using MA Purchase Contracts.
The total process is designed to accelerate the matching process and to procure and negotiate the best possible price for both the MA buyer and the vendor, whilst leaving the Assquire investor or Fund to assess their accelerated yield of up to average 7%pa (after tax and after CGT paid in year 1 (PAC investors only)).
They do this, with the knowledge that there may be a suitable property for sale that an MA buyer has shown interest in buying and possibly even been credit assessed for. The MA buyer transacts knowing they have a “security blanket” if they encounter an adverse personal circumstance like divorce or loss of job, without encountering a growing mortgage debt and possible mortgagee or “fire” sale, plus selling costs. They simply exercise their right to terminate and vacate, returning all capital growth to date to the Assquire investor or Fund – who may potentially reassquire the property elsewhere – or sell it.
An upfront panel market valuation (also commissioned by HRL) will underwrite the Assquire investor’s or Fund’s revenue position and choices also, relative to available capital and the negotiated properties presented on a batched basis for individual consideration and funding approval or rejection.
Real estate agents remain commissioned and paid by the vendors, without any need to conjunct. Mortgage brokers are offered a broking commission by HRL of 0.5% of a notional loan equal to 75% of the current valuation of the property allowed to the Assquire investor or MARF 1 for use in the Assquire system, paid when HRL has its client establishment fee released under the Purchase Contract terms – expected to be 28 days after the consumer moves into occupation of the property with all preconditions fro release of the MA Buyer’s deposit met.
Upon customer application for MA, there is a short waiting period to see if MA buyers pass our credit and insurances prequalification, and then a process of selecting a home. These homes can be presented to Mortgage Alternative Pty Ltd (MAPL) and HRL from the open market through any Assquire licensed and Assquire accredited/trained real estate agent or builder, or from a shortlist compiled by MA with assistance from a buyer’s agent.
Agents and builders will progressively co-ordinate vendors’ properties promptly onto http://assquire.com.au/property-listings/ as HRL’s and MA’s Approved Stock list for a postcode. Liaison with Mum and Dad vendors of established homes is the role of the real estate agents as per normal.
MA produces a new channel of buyers, and a sales opportunity for each of HRL/Mortgage Alternative, a mortgage broker, a Buyer’s agent (where involved), a builder (where involved) and a real estate agent.
Any buyer’s agents engaged by HRL for and on behalf of an Assquire investor or the Fund will have previously spoken with our prequalified MA buyers, to ensure that vendor’s homes meet their desired living requirements. Alternately, the MA buyers will have selected their preferred residence off a site like realestate.com.au, through an agent or off our approved list (at http://assquire.com.au/property-listings/). Those not already on the approved list will be inspected by HRL’s Property Risk Unit to assess suitability for the Fund – and/or for the MA buyer’s occupation for ten years using Mortgage Alternative.
To this end, HRL and their sub-licensed Fund managers will be armed with the Fund’s mandated requirements.
The Role Of Mortgage Brokers:
Mortgage brokers have their own lists of buyers struggling with finance. These buyers could be introduced to MA’s website and assisted to complete the on line application at http://mortgagealternative.com.au/register/ in a friendly and personal way that captures the client relationship early on, with a clear opportunity to retain a client connection to offer mortgage finance down the track, when the customer chooses to convert from MA to a traditional mortgage.
By being front of mind through your early association with the MA buyer, you are well placed to continue that mortgage relationship when the MA incubation period has ended. MA customers have the option to settle at the pre-agreed price at any time up to the contract end-date or vacate the property and not settle. There is more control with MA, more flexibility and ease of exit if their personal circumstances change adversely, and their payments are pre-agreed for greater certainty.
We are currently in the process of seeking the first Fund managers to take a sub-license and run their own Fund as well as seeking buyer’s agents for the planned Mortgage Alternative Residential Fund No 1 (MARF 1), and in the interim, HRL management representatives will fulfil a liaison role with the first conditional approved applicants. Mortgage broker groups are encouraged to play a role in encouraging both real estate agents and potential MA customers towards our MA website, to register for no obligation at http://mortgagealternative.com.au/register/ to see if they qualify for MA.
This acts as a means to mutual sales and commission opportunities and begins the process of purchase and sale of properties by our Personal Assquire Contract (PAC) investors followed in time by institutionally funded and separately licensed Mortgage Alternative Residential Funds.
We trust this provides a useful introduction to MA, and how you may play a role as a mortgage broker, and how that relates to the roles envisaged for a real estate agent or buyer’s agent, assisting HRL’s team to assemble a suitably-sized batch of matched prequalified buyers and homes that can be presented by us to Assquire investors now applying at http://assquire.com.au/investor-application/ or for institutional funding of the first $100m to $500m for MARF 1.
All enquiries: phone toll free on 1300 760 213 and ask for Keith Burchill, or email firstname.lastname@example.org.