You can now buy now, pay later your property purchase

author-avatar By on November 13, 2020
You can now buy now, pay later your property purchase

Photo by Waldemar Brandt on Unsplash

Fragmented property platform Bricklet has launched a new buy now, pay later platform to pay for your slice of the investment property pie.

In a 'world first', Bricklet allows fragmented property investors to pay for their 'bricklets' with a buy now, pay later (BNPL) scheme, with monthly repayments made over 18 months.

Typical investment bricks are between $15,000 and $38,000, and investors hold a real title to their part of the property.

Conveyancing fees, stamp duty, and other property costs are also bundled up into a 6% fee, and 10% of the brick price is also paid upfront.

Bricklet is able to be used in conjunction with BNPL only on properties in Brisbane, Sydney, and Melbourne presently.

Buying an investment property or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for investors.

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) investment home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Bricklet CEO Darren Younger said the introduction of BNPL to the fragmented property sector lowers the barrier of entry to investing in property even further.

“For too long, investment property has been out of reach for many and reserved for an exclusive club who can afford the significant entry costs," he said.

There is 'zero' interest and no early repayment fees, however fragment holders may pay fees if they default on their repayment plan.

On a $38,000 bricklet, with 10% taken off, that's $1,900 a month paid, plus 6% ($2,280) in fees. 

A 'brick' is typically 5% of the overall property price, meaning the holder is potentially one of 20 investors.

See Also: Fragmented & Fractional Property Platforms Compared

According to MoneySmart, the average investment home loan interest rate in September 2020 was 2.90% p.a.

On a $400,000 home loan repaid over 30 years, that equals $1,665 per month, not including any additional fees or stamp duty.

The news comes after a BNPL platform was introduced specifically designed to pay rental bonds.

In May, Bricklet also introduced a 7.5% personal loan through Maleny Credit Union catered towards purchasing fragmented property.

Various consumer groups have pushed for BNPL platforms to be credit regulated like other financial products such as credit cards and loans.

In July, Financial Counselling Australia CEO Fiona Guthrie told Savings.com.au that BNPL should be regulated under the National Credit Act.

“If it looks like a duck, and quacks like a duck, it is a duck. BNPL is credit and should be regulated like other credit products," Ms Guthrie said.

“Because BNPL providers are not regulated, and thus not licensed under the Credit Act, they don’t have to check if you can afford the credit, don't have legal obligations to offer hardship arrangements and don’t have to join the dispute resolution scheme - the Australian Financial Complaints Authority."

In Bricklet's case, affordability checks are done to determine if an investor can use the BNPL platform.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Harrison joined Savings in 2020. He is an experienced journalist, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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