PHOTO: FILE
A new home loan company is offering New Zealand’s lowest interest rate of 1% to shake up the market, reduce barriers and make home ownership more affordable.
Banking industry experts and technology entrepreneurs have launched Pro Fund Me disrupting the home loan market by providing the cheapest interest rate and reducing the amount of money people ultimately need to lend from mainstream banks.
From today, borrowers will pay just 1% interest on a Pro Fund Me home loan which can be worth 10% of an approved new build’s house price.
Pro Fund Me Director Addison Curd says they want to help people avoid the pitfalls attached to the traditional home loan model. “We are proud to now offer the lowest interest rate in Aotearoa and our intention is to simply make owning your own home more affordable with this generous deposit contribution.”
For a $1 million home, Pro Fund Me will lend a maximum of $100,000 and charge just $1000 a year in interest. Borrowers then pay off that loan (interest and principal) over 30 years, and obtain a regular mortgage from a bank for the balance of their purchase, saving themselves tens of thousands of dollars in interest repayments.
Because clients obtain their Pro Fund Me loan before applying to banks for a mortgage, the loan effectively boosts the size of their deposit and makes their application more attractive to lenders.
Pro Fund Me is not a second-tier lender but something new to the market. By directly boosting borrowers’ deposits, Pro Fund Me will help more people avoid paying higher interest rates with their main bank, especially if the applicant has a deposit less than 20 percent,” Curd explains.
For a new home worth $850,000, a borrower might have a 10% deposit ($85,000) themselves and then borrow a further 10% ($85,000) from Pro Fund Me. That means they only then have to borrow $680,000 from a bank. “They will ultimately save over $15,000 a year in interest payments compared to someone who has to borrow $765,000 and pay market interest rates with low deposit penalties, on that full amount.
“That’s enough money saved to pay all your utility bills and enjoy a family holiday annually. Our borrowers can free up their cash and redirect it to other cost of living needs to help take the pressure off their household budget, so they’re not crippled by high interest rates.”
Pro Fund Me’s announcement will come as welcome relief to many first home buyers after the Government recently scrapped the First Home Grants which had given low-income earners $5000 towards an existing house or $10,000 to purchase a new build.
This new home loan model works in conjunction with developers and trusted build partners involved in The Building Collective, who leave some of their profits behind (to be loaned out by Pro Fund Me) and re-coup them once the loan is repaid. “It’s a case of delayed gratification for the greater good – helping hardworking New Zealanders into their own homes.”
Pro Fund Me loans are therefore only available for new builds constructed by The Building Collective which currently has 250 properties for sale in Centra Auckland. The new homes are priced from $780,000, so sit within an affordable range for both first home buyers and investors, and there are plans to build thousands more right across New Zealand.
“Pro Fund Me is New Zealand-owned and operated. We don’t have branches or other high costs. Instead, our cost structure is low, and our business is agile,” says Curd.
Hundreds of independent mortgage brokers have signed up to facilitate Pro Fund Me loans. Borrowers must register on the company’s website and will then be connected to a mortgage broker who will guide them through the lending process.
“The loan will be assessed under more lenient lending criteria than the main banks, but we do still abide by the Credit Contracts and Consumer Finance Act (CCCFA) and good lending criteria when assessing a client’s ability to repay their loan.”
For more information about Pro Fund Me visit www.profundme.nz
Or to register for a property visit or www.propertynous.nz