Staircase FAQ

About Staircase Delayed Deposit Mortgage

Staircase helps you to acquire a property earlier or to purchase a larger property by funding a portion of your deposit. Think of it as delaying a portion of your deposit to a time when your equity in your property has increased and your financial position has improved. 

Typically as a first time homeowner, it takes 4-8 years to raise sufficient deposit. As an investor, deposit requirements are more onerous than they have ever been. A Staircase DDM loan is ideal when you can meet lenders serviceability requirements, but you have not saved a sufficient deposit to purchase a property. You may be starting out, have a new job or wish to purchase an investment property and want to get into the market sooner.

Staircase matches your cash flow requirements, by providing an interest-only deposit loan. We help you grow into your property. We call it "Stepped Property Ownership".

Here at Staircase, your loan applications are handled by real people who want your application to be successful,. Most of our loans are approved within 72 business hours after which a certificate will. be sent to you or your broker to be included in the lender application.

Initially Staircase is focusing on owner occupied properties in selected postcodes. If you are a property investor or offshore purchaser, let us know and we will consider these loans on a case by case basis.

At the end of the loan term, you’ll have three options:

► Refinance your entire loan through your current lender or through a new lender. In fact, our brokers will assist you on an annual basis to determine whether your loan can be refinanced. Since there are no early termination fees, it suits you to refinance at the earliest opportunity.

► Pay out the Staircase loan.

► Roll over the loan. In this case a new loan will be established which will incorporate the original principal amount as well as any accrued capital gain.

Is Staircase preferable to ... ?

Staircase DDM is designed to match your cash requirements now. This is done by providing an interest-only loan. The additional rate and principal you may normally pay for a personal loan is charged at the termination of the DDM loan, but only if there has been capital appreciation on your property.

In addition, the Staircase DDM loan will be handled by your broker as part of your loan package, thereby simplifying the loan process.

Generally personal loans would require a principal and interest payment,, be limited by quantum and may not be available for home loan deposits.

If your loan has an LVR (loan to value ratio) of over 80%, lenders will generally require you to take insurance called LMI (Lenders Mortgage Insurance). 

LMI depends on many factors, but are generally more expensive than a DDM loan. Your broker will be able to model the scenarios for you, so that you can understand under what circumstances a DDM loan may be more expensive than LMI. In addition, LMI is not always obtainable, and the requirements are generally stricter than lenders' requirements. 

Your LMI premium (which could be as much as 4-6% of the loan value) is a sunk cost that you will carry around with you for the life of the loan. It is negative equity on day one of your property ownership. Because of this LMI premium, you will also find it hard to change loans to a lower rate, as you have already paid the LMI premium, and may even have to pay the premium again if you change loans. Essentially you are locked into a loan with no flexibility.

As a borrower, this type of insurance has no benefit for you whatsoever - it is protection for the lender if you default on your loan. In an event of a default, the LMI insurer will chase you for any shortfall you failed to pay the bank. 

Being able to provide your full deposit is certainly the best option. However it could take 4-8 years to save for a deposit, during which time you would not be benefiting from the growth in the market.  

As an investor, you may want to split the 20% deposit you have available over two investment properties by using Staircase.

Costs and Charges

Staircase will generally contribute half of your entry costs. Entry costs include your deposit as well as additional costs such as stamp duty and conveyancing fees, which typically add up to 5% of the property (depending predominantly on the state you live in). Your entry costs into a home are therefore 25% of the purchase price (20% deposit plus 5% costs).

Since we fund up to 50% of entry costs, this would effectively be funding 12.5% of the purchase costs, therefore lowering your LVR to 80% so that the primary lender does not charge you LMI (Lenders Mortgage Insurance). This is potentially a huge saving.

For an investment property, we would still fund 50% of your entry costs, but at an LVR of 70%.

Loan amounts may be up to $250,000. See our calculator here

In order to match your immediate requirements, Staircase loans are structured as interest-only repayments over a 5-year period. Typical interest rates vary from 10-14% (Comparison rates 10.60-14.74%*). At the end of the period you will pay us back the principal and our share of the capital gain via a Capital Appreciation Fee. We only take the share of the capital gain as a proportion of our contribution, so the bulk of the capital gain is retained by you. For example, if we contributed 10%, we would share in 10% of the Capital Appreciation. We also charge an establishment fee of 0.45% of the property value upfront, There are no surprise fees or charges - just fair compensation for getting you into a property sooner.

*The comparison rates are based on a 25 year, $150,000, secured DDM loan. Fees and charges apply. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

See some practical examples here

Loan term is 5 years. The loan may be rolled over for a further 5 year term. The loan can be terminated at any time with no penalty.

Of course - we want to help you "step up" your property ownership. At any time you can pay back the loan in full or in part with no penalty. In fact we will help you refinance your loan once you qualify.

At the termination of the loan, we will use standard industry data to determine the actual capital gain. If you disagree with the valuation, you are welcome to use an approved valuer from our panel to value the property. We only require our fair share of the gain. 

The capital Appreciation Fee is calculated as a proportion of Capital Gain, not the property value.

The capital appreciation would not apply, and only the principal will be due at the termination of the loan.

Application and Eligibility

► Fill in the simple loan assessment found here

► Call us on 02 8317 1152

► Get your broker to give us a call

► Email us by using the form at the bottom of this page

We will work with you and your broker if applicable to arrange a suitable loan for you. Staircase DDM loans are not low doc loans, and we need to be able to show serviceability to your lender. Your DDM loan will be fully disclosed to your lender so that both Staircase and your lender can comply with the responsible lending requirements which require loans to be suitable and affordable for consumers.

Making Payments

Monthly payments are automatically direct debited from your bank account. We will set that up during the loan process.

There are no penalties for early repayment. We want to help you "step up" your property ownership. At any time you can pay back your loan in full or in part with no penalty. In fact we will help you refinance your loan as soon as a primary lender will refinance the entire property.

If your circumstances change, speak to us as early as possible. We will help arrange a payment plan.