Example of a house worth €300k with a mortgage of €300k
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Don’t forget that with a mortgage, you are repaying the capital every month and will own the house outright after 25 years.
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If a borrower can afford to pay the market rent on their home, then they have enough to be able to do a deal with their lender.
Their website says that they will consider HAP tenants. Time will tell if HAP will deal with such properties that are, by definition, outside the existing Mortgage to Rent scheme.
A caller suggested that it might be targeted at people who would get HAP
This is the crux of the matter.
From my knowledge of the financing structures in place for such schemes, Arizun would need a minimum 7% rental yield on their investment. On a €200,000 property this would involve a rent of €14,000 a year, i.e. €1,166.66 a month.
As a PIP, I could possibly do a Section 115A PIA under which I would:
Their website says that they will consider HAP tenants. Time will tell if HAP will deal with such properties that are, by definition, outside the existing Mortgage to Rent scheme.
- Reduce the mortgage to say €190,000 (yes, as a PIP I can reduce the mortgage to less than its market value: I could technically reduce the mortgage to €180,000 i.e. 90% of its market value to allow for what the bank would realise from the property in a bankruptcy)
- Fix the interest rate at 3%.
- Fix the term at 20 years
- The monthly mortgage payment would be €1,053.74
Jim Stafford
The head guy of Arizun was on with Sean O'Rourke this morning. When asked if they were a vulture fund, he said no...."we are more like a pension fund".CK: Comments
Says they are never for the borrower. Called them a a vulture fund, CK says it's not a VF. Says take good financial advice. Whatever people decide.
That was it.
So Jim than the question is why are people not going to a PIP like you.
I suspect no bank will fix a rate for 20yrs.
Ciara knew her stuff too and put in some valid questions.
I will be discussing this on Newstalk and this is the briefing note I sent them. I also sent it to Arizun and asked them to call me.
Maybe because they were well briefed?
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