I sit on the advisory board of a company, Rismark, who have been investing innovative residental real estate finance models (So I need to declare my interest there). This work came out of the Prime Minister’s Home Ownership Taskforce (2003) of which I was a member.
This week, equity finance mortgages hit the market. They were launched by Adelaide Bank who are partnering on marketing the Rismark product. You can read more about them here. The basic idea is that your bank takes a 20 percent stake in your house and bear that if, when you sell your house, it has depreciated in value. If it has increased in value, they share in the price to the tune of 20 percent (their stake) plus another 20 percent of the upside only. So if you bought a house for $500K, your outlay would be $400K. So if you sell it for $600K a few years later you get back $460K. What this means is that you have saved interest on $100K of borrowings you might have had to make. What is more is that you have shared the risk with another rather than bearing it all yourself.