Devine's catchcry "Why Rent when you can own" should be replaced by "Why you pay more for a house with Devine Homes."
They sound great, house and land packages offered by Devine Homes, with little or no deposit. In fact, you can walk in the front door of your new home having stumped up very little of your own cash. But there's a catch. And it will cost you tens of thousands of dollars over the next 30 years.
Devine Homes operate in Queensland, South Australia and Victoria. You may have seen their TV and print advertisements, featuring none other than the former VFL hard man Leigh Matthews. Is he a man you can trust? Just ask Neville Bruns.
Devine are specialists in marketing their homes to first home buyers. So good that they have had a massive spike in sales since the boost to the first home owners grant was announced. Basically, they offer you no deposit home loans, and will cover most of your costs in getting into your home. They call it their "No Deposit, No Legals and No Worries finance."
It all sounds so good. But watch out for the fine print. Devine Homes subsidiary First Permanent is the finance company that will be giving you the loan. While Devine can arrange finance from any of the other banks or brokers, this wont apply to their No Deposit Loan.
And for the privilege of taking out the loan with Devine and First Permanent, you will be paying at least an extra 1% interest rate. And it could be more than that, depending on the finance options and honeymoon periods offered by other lenders to new borrowers.
Currently, the Devine Homes interest rate is about 1% above that offered by the regular bank's no frills package. And its about 1.5% above an introductory rate which could be as long as a 3 years.
A rate just 1% higher doesn't sound like much does it? But over the course of 30 years, you will be paying tens of thousands of dollars more for your loan. As an example, a $300,000 loan over 30 years will cost you at least $68,000 more if using Devine Home finance. That's over $180 per month more than financing with a bank.
What you also have to keep in mind is that Devine Homes are the ones who set the price for the house. You are not buying a property in a competitive market, the prices are fixed by the builder and finance company. There is no guarantee that the property being purchased isn't already overvalued. Any minor collapse in the property market could affect Devine Homes more than other owners.
That all adds up to a very bad deal. Of course, these deals are not restricted to just Devine Homes. There are others out there. Remember that it always pays to check the fine print, and before making the biggest financial commitment of your life, do some comparisons. You may just save yourself some serious money.
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