CommBank backs rent-to-own scheme

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on February 04, 2022 Fact Checked
CommBank backs rent-to-own scheme

Commonwealth Bank's venture capital arm x15 has invested in rent-to-own startup OwnHome.

OwnHome provides a 'transparent' and 'certain' path into homeownership, allowing approved, credit-worthy customers to move into their homes without needing a deposit by paying an upfront fee and making 'simple' monthly payments.

The starter fee is equal to 1.5% of the home's value, and once OwnHome buys the borrower's home, they pay an additional 1% that accrues as a 'Purchase Offset'. After this, they can move into their home.

The monthly repayments are equal to 2.5% of the home's value each year.

OwnHome also locks in the pre-agreed price, 'protecting' borrowers from a runaway market, with capital growth pegged at 3.8% annually.

After three to seven years, customers can buy their home at this price and put the deposit towards their purchase.

See Also: Pros & Cons of 'Rent to Buy' Schemes

Managing Director of x15 Toby Norton-Smith said housing affordability is a challenge for many Australians, particularly young people.

"We believe OwnHome will provide an alternative path to home ownership, particularly for first home buyers who are responsible savers but aren’t able to rely on the bank of mum and dad for help with the deposit," Mr Norton-Smith said.

CBA's Group Executive Retail Banking Services Angus Sullivan said OwnHome is helping address saving for a deposit - "one of the biggest challenges currently facing first-time home buyers".

"As Australia’s largest lender to first homebuyers, innovating and improving the home buying journey is the cornerstone of what we are doing to help our customers and today’s investment in OwnHome will provide greater choice to those who dream of home ownership but seek a different route to the traditional rent-and-save approach," Mr Sullivan said.

"This is in addition to our support for thousands of first homebuyers via the Government’s Home Guarantee Schemes."

OwnHome Co-founder James Bowe said in just over a year, the company has grown its team and customer base and, through its partnership with property management agency :Different, recently expanded into the Queensland property market.

"As we scale and shape the model in Australia we will continue to benefit significantly from the support of like-minded partners in CBA and x15, who share our mission to help more people on the road to home ownership," Mr Bowe said.

Cost breakdown on a $400,000 home

  • Starter Fee: $6000
  • Purchase Offset: $4000
  • Monthly 'Rent': $833.33
  • Capital Growth/Purchase Price after 5 years: $481,999.69

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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *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. Rates correct as of May 26, 2022. View disclaimer.


Image by HiveBoxx on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

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