WO2007113696A2 - Procede et systeme d'investissement et de pret - Google Patents

Procede et systeme d'investissement et de pret Download PDF

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Publication number
WO2007113696A2
WO2007113696A2 PCT/IB2007/050344 IB2007050344W WO2007113696A2 WO 2007113696 A2 WO2007113696 A2 WO 2007113696A2 IB 2007050344 W IB2007050344 W IB 2007050344W WO 2007113696 A2 WO2007113696 A2 WO 2007113696A2
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WO
WIPO (PCT)
Prior art keywords
installment
rate
loan
nominal
payable
Prior art date
Application number
PCT/IB2007/050344
Other languages
English (en)
Inventor
Jacob Johannes Human
Original Assignee
Johan Human And Associates Cc
Priority date (The priority date is an assumption and is not a legal conclusion. Google has not performed a legal analysis and makes no representation as to the accuracy of the date listed.)
Filing date
Publication date
Application filed by Johan Human And Associates Cc filed Critical Johan Human And Associates Cc
Publication of WO2007113696A2 publication Critical patent/WO2007113696A2/fr

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Classifications

    • G—PHYSICS
    • G06—COMPUTING; CALCULATING OR COUNTING
    • G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
    • G06Q40/00—Finance; Insurance; Tax strategies; Processing of corporate or income taxes

Definitions

  • This invention relates to an investment and loan method and system.
  • Asset finance such as home loan finance is mainly provided by banks in South Africa.
  • Home loans are repaid over a period of 20 to 30 years through monthly installments made by the lender (homeowner).
  • the installments are calculated at the commencement of the loan by considering the cost of borrowing by the bank.
  • Level installments are assumed to be payable over the period of the mortgage.
  • the installments contain varying levels of capital and interest. In general, initial installments consist mainly of interest and the capital outstanding under the loan reduces very slowly at first, accelerating in later years.
  • This cost of borrowing depends primarily on the "repo rate”, an interest rate set by the Reserve Bank, in South Africa, and elsewhere on the risk-free short term nominal interest rate. In South Africa the "repo rate” is linked to the prime overdraft rate quoted by banks. The particular interest rate payable by a borrower depends mainly on an assessment of the default risk of that borrower and other Banking criteria.
  • installments may be unaffordable during a first period of repayment of the loan, whilst becoming more affordable as the borrower's income increases with inflation, during subsequent periods of repayment; and installments can fluctuate significantly with changes in the underlying nominal interest rate, charged by the lender.
  • This invention extends to a loan system comprising computing means for calculating an installment amount of at least a first installment payable by a client of a financier such that the installment amount is lower than that of at least a first traditional installment that would have been payable by the client had the traditional installment been calculated using a nominal interest rate, and for increasing the installment amount at a rate derived from a market indicator.
  • the installment amount is increased at a rate equal to a market indicator at predetermined intervals.
  • the installment amount is increased at a rate equal to a market indicator at determinable intervals.
  • At least a final installment amount is higher than that of a final nominal installment that would have been payable by the client had such nominal installment been calculated using a nominal interest rate.
  • An investor is provided with an asset-backed security that provides market indicator linked returns, as a result of the calculation of the installment amounts.
  • the installments are increased at a rate equal to the market indicator.
  • the nominal interest rate may be an average interest rate offered in a country or territory for financing a certain class of asset.
  • the nominal interest rate may be the rate at which a central bank in a country or territory lends money to commercial banks.
  • the nominal interest rate may be the rate at which commercial banks lend funds to one another on an overnight basis.
  • a loan and investment system is generally indicated by reference numeral 1.
  • the home loan method described herein provides the homeowner with a solution that considers the entire period of the loan. The likely income of the homeowner over the loan period is considered when deciding to grant the loan and to calculate installments. This, in turn will show an investor what the return on their investment (the loan to the homeowner) would be.
  • the installments are calculated by considering the real yield required by investors over the period of time that the loan is expected to be redeemed. Investors consist mainly of Life Offices and Retirement Funds in South Africa or any other interested investor that have a similar timeframe of investment as the homeowner.
  • the initial installments may be between 20% and 35% under current conditions in South Africa, below the installments of existing loan schemes encountered in the South African market.
  • the actual percentage by which the installments are lower, depends on the specific loan period, risk profile and other "known" variables.
  • Installments increase on an annual basis at the Consumer Price Index (CPI) depending on the preference of the investor.
  • CPI Consumer Price Index
  • the periodical, usually annual, increase can be timed to coincide with the requirements of the homeowner, such as his / her salary increase date.
  • the method is much less sensitive to economic changes. A 1% increase in inflation would typically result in a 7% increase in traditional mortgage installments, whereas the homeowner according to this method can expect a 1% increase, over and above CPI.
  • the initial advantage is a 20% to 35% saving on the installment payable in the first year of the loan period.
  • CPI or CPIX or CPI/CPIX shall refer to a market indicator.
  • the method may offer an investor a CPI / CPIX linked securitized bond. Many governments and other institutions provide some long term CPI / CPIX linked bonds that are similar to those offered by this method. The bond of this method pays a real interest rate that may be higher or at market value than that offered by similar government bonds.
  • the interest payment increases on an annual basis at the average CPI / CPIX.
  • the investment is secured by the properties financed by an administrator of the method.
  • the bond is redeemed after 20 years by a capital payment in year 20 equal to the value of the original loan plus inflation over the 20-year period.
  • the loan may be redeemed by periodic capita! payments to the investor that increase with CPI / CPIX on an annual basis.
  • the bond can be offered to investors (such as pensioners) that require a regular income that is CPI-linked, as well as guaranteed capital preservation.
  • the bond also enables the holder to trade interest payments in the secondary market, thereby increasing the number of risk management tools available to the investor.
  • Pt Installment required from borrower at time t.
  • A Annuity factor used to determine initial payment.
  • the following table shows the loan schedule and details of the $100 000 loan payable over 20 years.
  • Inflation Index is:
  • CPI / CPIX or other financial indices such as RPI (UK). This example assumes an annual nominal inflation rate of 6%.
  • the number of months since the loan has been advanced The example assumes that the loan will be repayable over 240 months.
  • Total real interest payable by borrower calculated by applying the monthly real interest rate to the capital outstanding at the beginning of the month.
  • the inflation cost is calculated by considering the monthly inflation rate applied to the outstanding capital at the beginning of the month.
  • the fees (payable to the administrator and intermediaries) are charged as a percentage of outstanding capital. (A nominal rate of 1.25% per annum, convertible monthly, is utilized in this example).
  • the default risk margin is calculated as a percentage of capital outstanding. This margin is calculated as compensation for the lender for taking the risk of defaulting borrowers. (A nominal rate of 1% per annum, convertible monthly, is utilized in this example). Payment
  • the payment is the monthly payment due from the borrower, such that the loan, plus interest is repaid within the contracted term (20 years in the example).
  • the table below illustrates how the cashflows generated by the loan (as described above) can be securitized to provide an index-linked fixed interest security as is common on many bond markets worldwide.
  • the cashflows outlined above will be ceded to a Special Purpose Vehicle (SPV), which will issue the bond to the market.
  • SPV Special Purpose Vehicle
  • the nett income of the SPV considers the payments made by the borrower, and deducts the default risk margin and the expenses that may be due to parties external to the SPV.
  • Interest here refers to the interest earned on cashflows by the SPV.
  • the interest earned in this case is equal to the real interest rate charged to borrowers plus the inflation rate assumed in the example.
  • This amount reflects the balance of funds in the SPV and consists of nett income, plus interest, less payments due to investors.
  • Other capital redemption terms may be utilized according to investor preferences.
  • the interest payment due reflects the nominal interest payments that the SPV is required to pay investors.
  • the example illustrates a bond issued to the investor that requires the SPV to make bi-annual interest payments such that annual payments equal 3.47% of the original capital. These payments are required to be adjusted by CPI such that the real value of these interest payments remain constant.
  • the interest and capital payments in this example will result in an effective annual return to the investor of 3.5% in real terms.
  • the payments should remain constant in real terms.
  • the method thus provides affordability, security, predictable lifetime cost, home equity and flexibility.
  • initial repayment over 20 years will be more than 25% below equivalent traditional mortgage and initial repayment over 30 years will be more than 35% below equivalent traditional mortgage in a country such as South Africa.
  • the invention will provide guaranteed continued affordability as repayments increase only with CPI on an annual basis and income is expected to increase with at least CPI.
  • the table shows a comparison of the security offered by the invention.
  • the following graph is a comparative graph of home equity for a $100 000 house.
  • Home equity is defined as the difference between the capital value of the property and the outstanding loan on the property.
  • the graph shows that there is negligible difference between the equity created by the invention and the traditional method of home loan finance.
  • the first example assumes that a potential homeowner can only afford a certain monthly payment, due to credit requirements that limit repayments to a certain percentage of income.
  • the invention allows the homeowner to purchase a home worth $100 000 as opposed to the $71 000 that the traditional method allows for.
  • the first graph shows repayments over 10 years:
  • the graph below shows the impact on home equity.
  • the invention has a better home equity profile in this example:
  • This graph illustrates that the invention enables homeowners to purchase their properties at an earlier stage and therefore save significantly in the long term.
  • the next graph compares the home equity profile of the two homeowners and shows that the invention creates more equity than the traditional method of financing.
  • market indicator shall also include an index used in an economy.
  • the increase of the installment amount could be derived from an indicator such as the CPI, in other words, it could differ from the CPI by a predetermined amount or factor which means it could be equal to the CPI.

Abstract

L'invention concerne un procédé et un système d'investissement et de prêt. Le procédé d'investissement comprend les étapes consistant à : consentir un prêt à un client ; calculer un montant de versement associé à au moins un premier versement payable par le client pour contribuer au remboursement du prêt, de telle sorte que ledit montant de versement soit inférieur à celui d'un premier versement traditionnel qui aurait été payable par le client si ce versement traditionnel avait été calculé sur la base d'un taux d'intérêt nominal ; et majorer le montant de versement d'un taux déterminé à partir d'un indicateur de marché.
PCT/IB2007/050344 2006-02-01 2007-02-01 Procede et systeme d'investissement et de pret WO2007113696A2 (fr)

Applications Claiming Priority (2)

Application Number Priority Date Filing Date Title
ZA2006/00933 2006-02-01
ZA200600933 2006-02-01

Publications (1)

Publication Number Publication Date
WO2007113696A2 true WO2007113696A2 (fr) 2007-10-11

Family

ID=38015566

Family Applications (1)

Application Number Title Priority Date Filing Date
PCT/IB2007/050344 WO2007113696A2 (fr) 2006-02-01 2007-02-01 Procede et systeme d'investissement et de pret

Country Status (2)

Country Link
WO (1) WO2007113696A2 (fr)
ZA (1) ZA200807103B (fr)

Cited By (1)

* Cited by examiner, † Cited by third party
Publication number Priority date Publication date Assignee Title
WO2012019223A1 (fr) * 2010-08-11 2012-02-16 Retail Money Market Ltd Système de mise en correspondance pour contrat de détail

Cited By (1)

* Cited by examiner, † Cited by third party
Publication number Priority date Publication date Assignee Title
WO2012019223A1 (fr) * 2010-08-11 2012-02-16 Retail Money Market Ltd Système de mise en correspondance pour contrat de détail

Also Published As

Publication number Publication date
ZA200807103B (en) 2009-10-28

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