Reduce the savings pain, but share capital gain

There will no need for renters to hold off as long to buy a home if they choose a new style of home loan in which they can borrow 105 per cent of the value of a property, an amount that help pay legal fees and reduce the size of as deposit. The new loan, from Mobius, a subsidiary of Wizard Home Loans, comes with a catch. Borrowers would have to share up to half of any short-term capital gains with the lender. Consumer advocates have urged a cautious approach to Australia's first shared equity loan. The Head Start Equity Loan involves Wizard advancing the full value of the property up to $500,000, plus a further 2 to 5 per cent to cover costs such as stamp duty. The variable interest rate of 7.69 per cent compares with the banks' typical standard rate of 7.07 per cent.

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