Revealed: The home loan that could save you a fortune

[naaman fletcher]

HOMEBUYERS are to be offered never-ending mortgages in a bid to overcome Australia's affordability crisis.

ING Direct, Australia's fifth largest lender, is preparing to sell loans that have no fixed term and no requirement to repay any capital along the way.

At current rates, the interest-only loans would cut repayments on a $300,000 mortgage by $5000 a year.

Repayments would be kept to a minimum, allowing borrowers to benefit from capital growth in their property.

"People are needlessly being denied the chance to buy a property while prices spiral rapidly out of their reach" ING Direct CEO Don Koch said.

"There is an urgent need to provide more affordable options and borrowers should be able to choose whether they want to repay the capital, or not."

http://www.adelaidenow.com.au/money/revealed-the-home-loan-that-could-save-you-a-fortune/story-e6fredkc-1225870019522

Of course, we know what's going to happen.

[prolesunited]

1. Are they freaking crazy?

[Oregone]

2. Sounds like thatll cost you a fortune

If you don't pay down principle, you never gain equity in your home (wealth). You are basically a renter

[naaman fletcher]

5. Not if there is equity growth...

Of course, that was the same sales pitch for a lot of our crazy mortgage schemes.

[Ozymanithrax]

3. That is called "renting" n/t

[lunatica]

4. That's called renting isn't it?

[Lance_Boyle]

6. What happens when the 'owner' tries to sell after a decade or so of

paying the minimum?

This is nuts. Hasn't Oz seen what happened here with the "creative financing?"

[OneTenthofOnePercent]

7. If the house has gained value... he should pay off the principal.

This is basically like cheap renting with the renter/buyer covering any depreciation at the terminatoin of the "lease"... but simultaneously reaping any value increase.