Split home loans squashed
A recent Australian High Court decision declaring that a product known as a "split loan" is illegal is having ripple effects in the New Zealand market, although similar products are still available here.
Wednesday, July 7th 2004, 7:12AM
by Jenny Ruth
"I believe this is the end of the road," GEM’s New Zealand manager Keven Shaw.says of the legal process which has taken about five years.
In the wake of the decision, non-bank wholesale lender AMS has withdrawn its similar product known as "Equity Accelerator" from both the Australian and New Zealand markets.
Head of AMS New Zealand, Peter Cochrane, says his company had sold very little of the product so the decision was pretty much a non-event.
But the ANZ Bank-owned mortgage wholesale lender Origin is still providing a similar version of the product, known as "Smart Investor," and at least one lender, Pioneer Home Loans, is still promoting it.
Pioneer’s New Zealand manager Peter Anderson won’t say how much his company has lent on the product but says it is still making the product available to its customers.
Head of Origin in New Zealand Malcolm Jull says his company’s product differs significantly from the Austral product in that the loans for each investor are separately documented.
New Zealand’s Inland Revenue Department says it "always takes an interest in tax issues that arise in other jurisdictions and is aware of the recent ruling made by the Australian Tax Office and a recent Australian High Court decision," a spokesman says.
"The department has begun to do some preliminary interpretative work looking at split mortgages. As this work is still at a preliminary stage, Inland Revenue is yet to form an opinion regarding split mortgages."
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