How do does funding through the “Bank of Family and Friends” work?

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The “Bank of Family and Friends”

Did you know the big 4 banks in Australia collectively made $32Billion in 2023 from the interest collected from property owners?

Did you also know that an $800,000 traditional home loan costs you over $5,000 per month in repayments and that over the firth 10 years you pay almost $500,000 in interest?

Recent research has shown that on average a person has some 150 people in their social networks.

Why not build the wealth of your social circle and family & friends, rather than the bank?

You can now buy a property with the help of your larger social network of family and friends under a strong legal framework that protects everyone’s rights and interests as well as manages the obligations of all parties.

We call this Social Funding and it is now available to all Australians.

You Can Buy With a Little Help From Your Friends and Family

For the eager first home buyer, the dream of securing a place to call their own often collides with the stark reality of soaring property prices. In major cities such as Sydney and Melbourne, the prospect of owning a property continues to drift further away from the grasp of many hard-working Australians.

Skyrocketing housing prices, stringent lending criteria, and the ever elusive saving a sizeable deposit form a trio of formidable hurdles. The traditional model of building a large deposit and securing a home loan has become an increasingly arduous quest, forcing many to reconsider their expectations and aspirations.

At MyBrix, we refuse to accept the status quo. We stand alongside aspiring first home buyers as they navigate the complexities of the Australian real estate market. Our innovative approach embraces the power of technology, creating pathways towards ownership that were once unimaginable.

Through innovative fractional property investment, we’re empowering individuals to pursue their dreams of home ownership with renewed optimism. Our sound legal framework coupled with our transparent and accessible platform breaks through the traditional barriers to home ownership.

Now anyone can get onto the path to home ownership with a little help from their family and friends.

Your Family and Friends become the Bank

Looking to buy your first property, but can’t qualify for a loan or save sufficient deposit?

Perhaps you have friends and family who are willing to participate in funding your property with investments a little as $1,000? Collectively you and your wider social network can join together to fund 100% of your property purchase.

Looking to extend your property portfolio but have maxed out your ability to service a bank loan?

Perhaps you have family and friends who want to provide funding to you and get a commercial return on their investment? Create a win/win for you and your wider social network and fund a property without a bank.

How do does funding through the “Bank of Family and Friends” work?

You start by registering your interest with MyBrix and after a detailed consultation you reach out to your family and friends via social media, email, text as well as word of mouth to let them know about you’re your funding project. They express their interest in participating and indicate how much they can participate with, sort of like “go fund me”, for your property ambitions. 

Once you reach your target amount, your family and friends will be invited to create MyBrix accounts and undergo identification and once their account is created fund their account and buy Brix (fractional interests) in your future property. At this stage no funds are released to you, they are held in the accounts of your family and friends until the purchase of your property is complete.

We will provide expert assistance to you to help you find the right property at the best price and once you do, you place your deposit and get issued with a contract to purchase the property. Our conveyancers will work with you to finalise and settle the property and place a mortgage on the property to protect all your family and friends as investors.

Once the property settles, you will start the buy back process from your family and friends based on the amount and timeframes you have agreed to.

How do you purchase a property with the help of your family and friends?

Here are the steps to get you started on your property ownership journey through Social Funding

  1. Register your interest in buying a property through social funding
  2. Consultation with our experts to map out how Social Funding can work for you
  3. Use the tools we provide to help you reach out to and inform your friends about your funding project
  4. Your family and friends express their interest in assisting you fund your property
  5. Once your target is reached, you invite your family & friends to create a MyBrix account and fund their MyBrix wallets and buy Brix in your future property (funds stay in their account until property settlement)
  6. Once all the required funds are deposited into the individual wallets of your family and friends, our experts will work with you to find and secure the right property at the right price
  7. You pay the deposit for the property and work with our conveyancer to settle the property
  8. The funds from your family and friends are released to the conveyancer to settle the property and pay any fees (including Stamp Duty etc)
  9. Once settled, the Brix are distributed to you and your family and friends and any excess funds deposited into your MyBrix wallet
  10. You will have 3 months before the Buyback starts, after which you will pay an agreed amount each month to buy brix back off your family and friends

Worked Example of Social Funding

A homebuyer consults with MyBrix and specifies the maximum amount they want to spend on a property. The total amount needed for the purchase and all fees and charges including stamp duty and MyBrix fees is calculated less the amount of deposit they have.

If they want to buy a property worth (say) $900,000 and have a deposit of (say) $100,000, the total funding needed for the purchase will be $800,000. To cover all the fees and charges a 10% will be added to the fund raise.

The Value of the purchase will then be $980,000 ($900,000 for the property and $80,000 in fees and charges)

The price of each Brix your family and friends pay will be $980,000 divided by 10,000 this becomes the Brix value of $98 each. This means of the 10,000 Brix you will initially own 1020 Brix and your family and friends 8,980 Brix.

If you set the index price to 7%, your family and friends will sell you their Brix back at an indexed rate each year for the purchase price plus the indexed rate.

This means that your family and friends will sell their Brix back to you each month in the first year for $105, and in the second year $112, in the third year this increases to $119 per Brix.

You decide how much you want to spend to buy back Brix each month, we suggest setting this at a similar amount to a traditional loan, in this case lets use $5,562 per month. You can of course buy back more than $5,562 per month in line with your cashflow, but setting a realistic amount will ensure you don’t default on buyback payments to your family and friends.

$5,562 per month in year 1 buys back 52 Brix per month (625 annually) and 49 monthly in year 2 (587 annually), and 553 in Year 3.

Frequently Asked Questions

Anyone in Australia can apply and any property in Australia that has an individual property title can be purchased with Social Funding