A new infopassing program in NSW could make the difference between a mortgage or a property deal.
Infopasses are a service offered by many lenders that lets them take a $30,000 deposit and then take a loan for up to $200,000.
“It’s the only way to pay off debt and it’s also the easiest way to get started,” says Andrew Scott, chief executive of Newstart Credit, a mortgage provider based in Melbourne.
“If you can’t access credit, you can pay off a debt.
You can get in and pay off the balance of the loan in a matter of weeks.”
Infopass is one of several infopasses being rolled out in New South Wales and Victoria.
The program is based on the idea that you can save money by paying off your debt, rather than paying it off at the time of purchase.
“The idea is you pay off your loan at the moment of purchase, which gives you more flexibility in terms of when you need to repay it,” Mr Scott says.
“And you don’t have to worry about paying it back again in the future.”
But Mr Scott warns the program is a complicated one and you need the right skills to manage it effectively.
“Infopassing is something that is not available for all borrowers, particularly those who are younger or in need of a financial assistance tool,” he says.
The program has been popular with young people who are looking for a quick and easy way to put down their debts, but some parents and others are concerned about the risk of children being at risk if they were to have an infopasse.
“You do need a certain level of sophistication to use it, it’s a complex program and there are a lot of things that you have to do,” Ms Scott says, adding that you need a high school diploma or GED, as well as a minimum credit score of at least 720.
Infostash, a lender based in Queensland, is the latest company to offer an infostass.
The $2,000 loan can be applied for online and is for up a maximum of three years.
The company has partnered with financial assistance provider ACBC Financial to offer the program.
“We’ve seen this opportunity in the past and we’re really excited about it, so we’re hoping that we can be the first to offer it to young people,” says Mr Scott.
Inspector Chris Latham from the NSW Department of Housing and Community Services says it is vital for young people to understand what the program entails.
“When you’ve got a $10,000 to $20,000 debt you don,t have a choice in the matter,” he said.
“I think we would all like to think that you know, what the outcome would be for your life and your family life.”
Inspectors have also been able to use the program to assess whether there are any other options available to people.
“In a lot more cases than not, if they don’t get into an affordable mortgage, they will need a new loan and we are seeing a lot who are at risk of not being able to afford to pay their mortgage or even a mortgage that they can’t afford,” Inspector Latham says.
He says it may be more effective for the borrower to find a mortgage on a lower income, such as a $300,000 home.
But, Inspector Laval says there are no guarantees.
“There’s a number of factors that can cause the loan to fail.
There’s also, in some cases, a lack of knowledge of the terms and conditions,” he explains.”
But in many cases, there are other lenders that will assist with that.”
Infostashing’s Infopasses program is also available in Victoria.
“We’re really pleased that NSW has done this,” says Infostash’s CEO Andrew Scott.
“That is a huge boost for us and our partners in New Zealand.”