The old way
Launch your dream sooner: dead rent money is a thing of the past. From Day 1 you’ll live in your home and benefit from any capital growth, rather than growth costing you by making it more expensive to buy later.
Typically, you’ll need to wait until you’ve saved a 20% deposit if you want to avoid Lenders’ Mortgage Insurance (LMI). You’ll also need to fund additional costs such as stamp duty and legal fees.
Finance for a house deposit: You can fund your house deposit by using the nel.fund, meaning you can access a range of lenders for your first mortgage loan.
If you’ve only saved a deposit of 5% you’ll need to find a lender that will give you a loan for 95% of the purchase price, which will have a hefty Lenders’ Mortgage Insurance premium lumped on top.
More control over your payments: co-funding means you buy the portion of the property you can afford now, and nel will fund the rest until you’re ready to go it alone. If you want to you can pay down some of the co-funding loan, making it easier to refinance later.
A loan repayment is based on a standard mathematical formula you can’t control that spreads the principal over a set number of years (usually 30 years). A typical loan repayment is made up of principal and interest; only the principal portion reduces your debt.
Peace of mind: co-funding includes an optional service where nel packages up the property data and analytics used by our experts in assessing your application and makes it available to you, in order to assist with your purchase.
Valuations are largely a “tick-the-box” exercise because banks can manage their risk by capping the loan-value ratio (LVR) and/or requiring you take out LMI. This information is tightly held and you’re in the dark about any risks the experts might see in the property or area where you are looking to buy.
A fixed regular payment: the co-funding fee is paid monthly and will generally range between 5% to 5.5%. It’s also set upfront based on the original co-funded amount, so won’t move around like interest rates. This makes co-funding different to traditional lending.