Hey everyone,
I’m looking for a home loan and I came across this product called Aspire from Wealth Maker Home Loans and wanted to get everyones thoughts on it. Basically the loan has 3 components:
1. Home Loan (standard variable rate)
2. Investment Portfolio ASX 300
3. Gap ProtectionHere’s a brief run down of it. The home loan is like any standard variable rate home loan that you obtain with any of the big 4 banks, however 30% of the monthly principal repayment will be automatically invested into the ASX 300 investment portfolio (top 300 companies listed on the ASX). This means you won’t have to fork out extra money to invest in the ASX 300 The income generated from the ASX 300 investment portfolio is used to pay down the loan.
However the thing that caught my attention was that should the investment portfolio perform poorly and is less than the outstanding loan balance at loan maturity then the built in Gap Protection will kick in and repay the difference. This In short it allows you to pay off their mortgage whilst simultaneously accumulate wealth for the long term with no downside risk.
Thoughts???
Here’s the website link: http://www.wealthmakerhomeloans.com.au/Sounds like there would be too many fees. Loan fees, gap protection (insurance) fees as well as brokerage for the shares. I am guessing they are an ETF so you will be paying a percentage for them aswell. I think you’re better off with a standard IO loan with an offset account and if you want a share portfolio as well then do that separately.
Just my opinion anyway.Cheers,
NathanYeah I had a look and the fees are higher than for a standard loan product, but at least its all tax deductible. There a MER of 0.8% p.a on the investment. But I guess the gap protection is what appeals to me. The cost is $25 per $5000 that you borrow. So I was thinking about taking a loan of $500,000 so that’s $2,500 and that would cover me for any investment losses which could range in the tens of thousands of dollars if another GFC were to happen.
You seem to have started 2 threads on this topic.
See my replies here
https://www.propertyinvesting.com/forums/getting-technical/finance/4345094(you aren't associated with this business are you??)
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If I would I wouldn’t be asking you such silly questions?
Yeah, the home loan product does look like a total ripoff. Why would someone want to give them more money than what is needed to make a decent profit?
Or you could do it yourself at a fraction of the price and shop around for the best loan etc.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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