WHEN is a discount, not quite a discount? That’s when it is actually a ‘deferred discount’ which slashes 25 per cent off your mortgage – for now.

There is a new breed of home loan scheme on the block after developer Horizon Housing and lender Bank Australia joined financial forces to create a mortgage initiative that lets buyers ‘put off’ 25 per cent of their mortgage until the day they actually sell up and move on. However long that may take.

Kyle Topp and Christina Stig, both 23, will get the keys to their brand new pad in Murwillumbah, NSW, in February. Once they begin mortgage repayments, the pair will only chip away at 75 per cent of their house-and-and package’s purchase price.

‘I was pretty sceptical at first; I guess I thought it was too good to be true,’ Mr Topp said.

‘I thought, hang on how are they going to make their money? What if we don’t move out for years?’ he said.

‘But I did lots of research and unloaded question after question on both the Horizon sales people at Hundreds Hills estate and Bank Australia,’ he said.

Mr Topp said the couple would not have been able to buy their dream home without the scheme.

‘It made a really big difference to the size of the deposit we could put down and it means we could bump up the amount of bedrooms and change other things,’ he said.

‘But most of all it meant smaller payments for us. And one day when we sell we know we’ll be OK to pay the 25 per cent because our home has already gone up in value,’ he said.Horizon Housing chief executive officer Jason Cubit said the company, which is a not-for-profit affordable housing provider, said there was really only one ‘catch’ in the scheme that seems too good to be true.

‘Well, I guess the catch is we’re a charity. Our aim is to help people into housing, but we will be expecting our money back at some point,’ he said.

Mr Cubit said the company was working off the principle that Australians stayed in a home for an average of 10 years.

‘We’ve got no set timeline, we’ve just done the numbers and I guess we’ve just taken that gamble,’ he said.

Not just available to first-home buyers, the rare home loan setup does come with plenty of fine print. There are eligibility criteria based on income, but once potential buyers meet those requirements, the scheme’s rules are simple.

‘The mortgage arrangement allows eligible buyers to service only 75 per cent of their land cost, greatly reducing repayments on their homes and breaking the rental cycle,’ Mr Cubit said.

The deferred 25 per cent of the home loan will be covered by Horizon Housing, payable when the owners sell the property, and it does not accrue interest or any charges.

Although the Horizon Second Mortgage Scheme is only available to buyers house hunting at the Hundred Hills development in Murwillumbah on the far north coast of NSW, Mr Cubit said the aim was to expand the scheme to other projects in other states.

‘We’re not quite there yet, but we’re working on launching the scheme in a few other states across the country,’ he said.

This is the income criteria for the Horizon Housing Innovative Mortgage Scheme:

???????????????????????? One adult – $59,111

???????????????????????? Two adults – $81,722

???????????????????????? Three adults – $104,333

???????????????????????? Sole parent with 1 child – $81,779

???????????????????????? Sole parent with 2 children – $101,385

???????????????????????? Sole parent with 3 children – $120,991

???????????????????????? Couple with 1 child – $101,329

???????????????????????? Couple with 2 children – $120,934

???????????????????????? Couple with 3 children – $140,541

Posted by Kirsten Craze – News Limited Network on 4th January, 2016