3. HB is responsible for all 3rd party charges (eg. valuer, FMH platform? legal, trustee –may needed if there’re multiple investors). These charges should be higher than a normal mortgage as there are more third parties and more steps. FMH put that at 4% of the house price. Note the upfront 2% booking fee.
4. 6 months before the 5th anniversary, the house is valued. HB has to decide – sell or refinance? The developer gets 1st bite of any capital appreciation up to the original 20% of the house price (remember, he hasn’t been paid his 20%). The refinancing is at the new house value, meaning, if the house appreciates, HB has to fork out more. And, has HB’s credit standing improved enough in Year 5 to support a higher loan?
FMH’s table shows scenarios of -+10% capital appreciation of up to -+30%. Taking the 20% example:
Day 0: House price RM300k.
Year 5: Value is RM360k.
Amount to refinance: RM300k. Remember that on Day 0, HB paid RM60k, investors RM240k. But at Year 5, HB has to pay RM300k to refinance.
5. If the property can’t be sold before the 5th anniversary, HB has to pay a rental yield of 5% (on new market value). This is very high. And open-ended until presumably a buyer can be found at the valuation price.