Features & Benefits – In Summary:

• Lower up front costs – see the flyer here or request a product brochure for full details
• Initial Cash Contribution is only 4.5% to 5% of Agreed Value and includes your stamp duty
• No upfront mortgage insurance[1]
• You don’t need a mortgage today to move into a home and live there while you save a bigger deposit. Up to 10% deposit progressively paid while you live in the home
• MA Buyers have their own mortgage security against the seller on the property, offering a measure of security for their position if seller defaults prior to settlement. Their lease is also registered on the title.
• Faster access to home occupation vs saving for a deposit avoids missing out if prices rise in future. Lock the ten year price and move in now, but property settlement deferred for up to 10 years.
• Enjoy the lifestyle benefits of living in your own home whilst you save your full deposit for a conventional mortgage. Ability to settle your purchase at any time within the contract period. 
• Easier to exit in pre-defined events if your personal circumstances materially change and you can’t meet your settlement obligations (subject to Purchase Contract terms) – could be much less risk than a standard mortgage in the event of a fire sale and property price slump.
• Fixed monthly payments for the entire term disclosed before purchase contract is signed.
• No risk of future property prices escalating further before you buy – Purchase price agreed at time of signing contracts
• Pre-agree price is set after an independent valuation of the property today (but is still negotiated with the seller to an Agreed Value then escalated to reflect the long term settlement terms – Less chance of buyers remorse, but still need to shop around. Agents act for sellers, not buyers, and this model is no different.
• Savings plan included to help you settle at the end of the term
  BUT THERE ARE RISKS:
• The MA product does not suit everyone.
• You must live in the home for the duration of the period up to settlement. You cannot rent it out, so you must be prepared to “stay put”. If you have a significant risk of interstate or overseas relocation with your employment or otherwise, this product is most likely not correct for you.
• The MA product is for people who are confident in the residential property market over the next ten years. In a property price slump over ten years (or less if your personal circumstances deteriorate and you cannot meet your pre-agreed payments to the seller), this product will cost you significantly more than renting. See buyorinvest.com.au/faq for details. 

•  extra cost over renting is likely to be true of taking a mortgage with a 10% deposit (and in many cases, the fire sale with a mortgage would mean you would be even worse off financially under a conventional mortgage than with MA). Run the numbers and seek independent financial advice if you are unsure.
• MA stakeholders have to be committed to a strict and adequate savings plan and be prepared to live in their home until the terms of sale are completed. Whilst settlement before the end of ten years is entirely possible if you accumulate a higher deposit and embedded equity if residential property prices rise over the years to settlement, there can be no certainty of that (just like with a mortgage). Independent advice is strongly recommended to assess your capacity to commit to long term contributions.
  If this product is correct for you, you’ll have all the benefits of living in your home now and more incredibly, taking ownership of your dream home within ten years, with a suitably safe and increased equity in your own home, and a conventional mortgage to complete.
• Mortgage insurance may apply if prices do not rise sufficiently over the pre-agreed price over the MA occupancy period [1]
• Flexibility to settle early[2]
• Costs similar to a 25 year mortgage + property ownership costs[3]
• MA may at settlement deliver a mortgage that could (for some) be lower in 8-10 years. Run the numbers or seek independent financial advice to compare the benefits and risks against taking a conventional mortgage, whilst your equity in the property is low[4]
• MA buyers benefit from all maintenance being the seller’s responsibility during the settlement period
• Reduced need for the usual property management inspections, approval delays and hassles. The Assquire system facilitates speedy resolution of repairs and maintenance issues that are the landlord’s responsibility by law[5]
• Option for up to 2 years insurance for your monthly payments if you lose your job through sickness or accident. Additional fees apply. Personal insurances can also be added/included in monthly payments. 
• You can use any of your death and total and permanent disablement insurances from your super fund to reduce your risks. The Assquire® system cannot mandate insurance requirements, so speak with your financial or insurance adviser about the protections you need.
• New and near new homes to choose from as well as established homes.

Mortgage Alternative offers different risks to you as the buyer, but it also offers you more choice and more benefits. You have the ability to live in your home NOW! There are more advantages to Mortgage Alternative than a traditional mortgage – you have fewer maintenance worries, home building insurance (excl. contents) and (at your option) your personal term life and TPD insurance can (for an additional fee) be covered in your monthly fee (unless you have suitable insurances currently that you can apply to reduce your downside risk of not being able to settle), plus you participate in a compulsory savings plan which builds your deposit and equity in the property over the contract period.  Mortgage Alternative is marginally more expensive as a monthly cost compared to a mortgage plus property ownership costs (on a like for like basis) but the lower up front costs accelerate property ownership compared to what can be achieved under most standard mortgage arrangements (see comparison tables below).

With a Mortgage Alternative product you get to live in your home NOW, for a cost that can be compared to a standard mortgage, with far less hassle and risk of future interest rate hikes than a standard mortgage. Your monthly fee is fixed, so you are no longer at the mercy of changing interest rates. In addition, your purchase price is also fixed, ensuring that any increases in property values will work to your benefit and not to your disadvantage. It’s simply smarter!

Let’s Take A Closer Look

With a Mortgage Alternative product, you get to move into your new home as soon as you have executed a Purchase Contract, lease and associated documentation, even though your settlement date for the purchase may not be for up to another ten years. You enjoy all the benefits of home ownership NOW, rather than waiting until you have saved up enough money for a deposit.

With a standard mortgage, you not only have the fees, principal and interest payments associated with the loan, you still have to fund stamp duty, lenders mortgage insurance, legal fees, home insurance, personal insurance, rates, body corporate fees and most maintenance costs. With Mortgage Alternative, all of these costs can be included in your one monthly fee (except for stamp duty – that’s already been covered in your up front cash + deposit of total 4.5% to 5%!).

When you compare the total of all these up front mortgage costs with Mortgage Alternative, you will find Mortgage Alternative smarter and cheaper in most cases and easier to manage until settlement, with little or no “fire sale” risk (because you don’t get title until you settle) and the ability to exit the property should you meet the terms for Take Back in the Purchase Contract. See the Product Specification summarising the Purchase Contract special conditions for details when you apply and receive your conditional approval to have us undertake a full credit assessment of you. Applying for conditional approval is free, and you apply on this website. Put simply, you have more control and more certainty than a mortgage!

Why Home Buyers will Love MA

Many home buyers will decide to pay the slightly higher payments because they remain competitive with mortgage + property ownership costs (see mortgage comparison tables here).

Also because they are building an equity stake in the property in a safer way and enjoying the lifestyle benefits of an owner, without any mortgage debt or interest rate risk whilst they are in the MA occupancy period.

Also because they can choose where they wish to live without being constrained by a new home and the lure of a $15,000 State Government Grant on a narrow selection of home locations that might (for many) be either a long commute from work, or just not offer them the home choice or location choice that MA does.

And  also  (in the case of first time buyers) because of the special Assquire® Grant that is paid on settlement (as a settlement adjustment) to lower their future mortgage. The Assquire Grant is explained here.

All the above benefits and yet it costs little more than a mortgage

The tables below demonstrate a comparison of a Mortgage Alternative contract over a ten-year period vs the costs involved with owning a home under a standard mortgage with the usual property ownership and insurance costs (a different table applies in each State for each of first home buyers and non-first home buyers, because of the different stamp duties, first home buyer grants (or duty concessions in the case of Victoria) and assumed minimum deposit requirements in each State):

The table shows that a customer using Mortgage Alternative will pay roughly the same total costs as a mortgage, a little more, but with much more certainty and considerably reduced risk (so long as they stay put and do not need to exit unexpectedly before they can settle)! This is a risk that only the buyer can assess for themselves.

Less Risk

For a buyer that can commit to a strict savings plan and who is prepared to live in the home until the terms of sale are completed, the Mortgage Alternative product is considerably less risk to a purchaser than a standard mortgage.

How is this so?

Well, first and foremost you have NO DEBT! We are not lending you money so you don’t have the burden of having a massive mortgage to keep you awake at night. You enter into a purchase contract (with a Buyer’s mortgage registered on title to secure your deposit and excess rents over the norm) with a settlement date up to ten years into the future. You live in the home immediately under a lease (with normal Residential Tenancy laws protections) after agreeing to buy the home in ten years (or earlier if you can afford it) for a pre-agreed fixed price. You enjoy all of the benefits of home ownership NOW without the burden of a huge debt. But you will pay much more than rent.

Secondly, you are not at the mercy of changing interest rates. Your monthly payments are outlined in your contract right up until settlement. With a standard mortgage, you are forced to choose what is going to happen to interest rates and then gamble on whether to fix your rate or leave it exposed to future fluctuations.

Thirdly, and perhaps most importantly, with Mortgage Alternative you can settle at the time of your choosing prior to the contract settlement date for the pre-agreed purchase price, or you can (if certain Take Back events specified in the contract affect your ability to meet your settlement obligations) walk away from your contract (in defined circumstances) and vacate the property, giving up all capital growth during your occupancy period to the investor. Whilst wou will have lost alll of your deposit payments and inflated rents in that circumstance, with a standard mortgage, you remain liable for your mortgage debt until it is paid back to the bank and you are exposed from day one to future property price fluctuations – including any severe property price slump.

Fourth, there is no pricing risk. You contract to buy your home at a pre-agreed price  – which is escalated from today’s market value (a value confirmed by an independent valuation panel commissioned by Haigslea Residential Limited from a panel of independent valuers) or an Agreed Value that you strike with the seller today.

Escalation is by a relatively small percentage annually, that takes account of the inflated rents you are paying the seller each month. This escalated price is effectively your option to settle at any time during the contract period – but you must pay the year ten price in the event that you choose to settle early – clearly, you need to be serious about home ownership and occupying the property as your principal place of residence to take Mortgage Alternative.

Nevertheless, if you get to the end of your contract and find that the market value of your home then is far less than the contracted price, you are free to vacate the property and walk away from the purchase if you meet the contract conditions and cannot afford to settle. The contract conditions set out circumstances likely to materially affect your ability to complete your settlement obligations. Of course, in this case, the investor retains the property and all capital growth (if any) during the MA period.

Mortgage Alternative is vastly different to a mortgage and clearly the most innovative path to home ownership for those people looking to get a foot on the property ladder, but who don’t want to save for years to make up a deposit and be exposed to hefty mortgage insurance costs. If this sounds like you, then lodge your application today.

Foot Notes:

[1] The only circumstance where lender’s mortgage insurance will be payable is if a property’s 2026 market value at the end of the ten year MA period (or at any earlier settlement time chosen by the MA buyer to settle earlier) is insufficient for the MA buyer to have a 20%+ deposit to gain a conventional mortgage (after taking account of the Assquire® savings plan embedded in your monthly MA payments plus your original 4.5% to 5% deposit and the extra deposit increments you make each month as outlined in your contract (deposit requirements vary depending upon which State you purchase in)). Just like the banks, Haigslea Residential and Mortgage Alternative have no control over future property prices.

[2] no penalty or price adjustment is charged to compensate the Assquire® investor for an early settlement. You simply pay the pre-agreed ten year price early.

[3] On a like for like basis, Assquire® payments are on a fixed formula (set out in the contracts), and whilst rents are fixed for ten years, deposit increments gradually increase over time, being indexed by a pre-agreed inflation factor (currently 2.5%pa) which does not alter materially for the life of the contract. As each case is different, these will be given to you after you have been fully credit assessed and before you execute any contracts and move into occpation of your home of choice.

[4] Individual cases vary based on different assumptions made as to home buyer status, house price purchased, length of conventional mortgage period, State, and future interest rate assumptions. Actual results may vary from person to person and as economic and property market conditions change over time. Buyers should review their specific contract terms and pricing and seek independent professional advice having regard to their own personal circumstances. A solicitor’s certificate is required, to ensure that you understand the features, benefits, rights, obligations and risks associated with using our products.

[5] Maintenance is the seller’s responsibility throughout the period up to settlement and insurance policies need to reflect the interest of both buyers and sellers. This can be explained to you in the contracts, and your solicitor will also explain to you how you are affected if something happens to the property in the period prior to settlement. The assquire system provides for a second independent building surveyor’s report commissioned by HRL at the Seller’s cost. This is completed at the end of year 5 of occupancy. See contracts for details.