Developer offers to help buyers pay mortgage
Given the slowing market, developers are probably getting a bit more creative.
Bruce Patten, mortgage broker
A developer planning nine West Auckland townhouses is offering to pay $300/week off buyers’ mortgages in a move one financier has called “a sales gimmick”.
Sam Mishriki, managing director of Orchard 10, has made the two-year offer amounting to $31,200/townhouse to each potential buyer of yetto-be-built two-level places planned for 10 Orchard St, Avondale.
“We’ll contribute $300 per week to your mortgage for a minimum of one year. After your first year, if interest rates are still above pre-covid levels, we’ll top up $300/week for another year,” advertising says.
Mishriki’s business does not yet own the land but has offered to buy it. He wants $869,000 for a 70sq m two-bedroom one-bathroom place and up to $1.05 million for a 100sq m townhouse with three bedrooms and two bathrooms.
He has not started construction but is seeking 10 per cent deposits to begin the scheme.
“I see it as a gimmick to try to get sales,” said Auckland mortgage broker Bruce Patten of Loan Market.
“Given the slowing market, developers are probably getting a bit more creative.”
Patten compared it to developers who offered a new Suzuki Swift, for example, when you bought a house.
“I would rather pay $20,000 less for the house.”
Mishriki denied the scheme was a gimmick, saying the mortgage cash would not be loaded into higher prices and he was not desperate.
“What we’re trying to do is to have some sort of a social element. Places in the area have sold for higher prices. We have a straight profit margin we charge which is reasonable,” he said.
James Kellow of NZ Mortgages & Securities said he didn’t previously know about the $300/week offer but his business was funding Mishriki’s company to buy the land and develop the townhouses.
Kellow said he had successful dealings with Mishriki already.
Mishriki said the offer “will keep your mortgage payments stress-free until March 2025”.
One of the five houses released for sale at this stage have been sold, he said.
Construction was forecast to start around September and be finished next March.
Asked how he’d conceived the $300/week offer, Mishriki said: “I’ve been watching interest rates go higher.
“The motivation behind this is that I can’t imagine paying a mortgage with higher interest rates.
“This, I thought, would help people be able to make those payments and fulfil their dreams of being able to own a house.”
A trust would be formed to pay the $300/week, possibly with Trustee Executors.