by Paul McBeth
Developers or homeowners selling their property can now use a special home loan deal as an extra incentive.
The Platinum Mortgage allows vendors to offer any prospective buyer a special loan package which has a lower interest rate ( even down to zero) for the first 12 months. Alternatively, they can offer the buyer a discounted interest rate for up to the first three years of the loan.
What this means is that the seller is paying some of the buyer's finance costs as a sweetener to the deal, rather than pumping more money into marketing or dropping the sale price.
Tim Symons, South Island Managing Director for Platinum Financial Products, says this mortgage product can be used by homeowners but is mainly pitched at multi-unit vendors or developers.
That's because developers are often left with the 'rump' of a subdivision or apartment building unsold and tying up capital. While some use discounts or sales gimmicks such as free landscaping or even a trip to Fiji, Symons says that these can leave early purchasers disgruntled for not having access to the same deal.
"The Platinum Mortgage is a marketing deal that has a financial implication. What it does, particularly for new homebuyers, is to help out initially with their cashflow."
A sales approach more common in the whiteware or computer industries, Symons says it isn't "a rocket scientist kind of idea".
"However, you need a seller to participate. You can't just offer it off the street."
He says that the asset-backed finance company Platinum Mortgage Fund (a securitised funding vehicle) is effectively the lender and also offers standard mortgages. The fund starting offering loans in August and Symons expects to reach at least $50 million in the first year.