WO2013075174A2

WO2013075174A2 - System for managing a portfolio of asset acquisitions

Info

Publication number: WO2013075174A2
Application number: PCT/AU2012/001444
Authority: WO
Inventors: Wayne Douglas CHAMBERLAIN; Donald William CRELLIN; Gerry O'donnell
Original assignee: Innov8 Financial Solutions Pty Ltd
Priority date: 2011-11-25
Filing date: 2012-11-23
Publication date: 2013-05-30
Also published as: AU2013201415A1

Abstract

A system (10) for managing a portfolio or collection of asset acquisitions, each asset acquisition being associated with a respective asset module (28) comprising an asset module controller and asset module storage for storing asset module software for controlling the asset module controller and storing asset module data. The system is operably coupled to communicate with each asset module and comprises a system controller (20) and system storage (22) for storing system software for controlling the system controller. The system controller is operable, under control of the system software, to: receive input data comprising: details of first interest rates associated with respective asset acquisitions of the portfolio and being a percentage of a borrowed first portion; and details of percentage increases in the value of at least one asset component associated with respective asset acquisitions of the portfolio from an initial value; automatically determine values of repayments of a first set of repayments for the respective asset acquisitions on the basis of the received first interest rates and communicate the determined values to the respective asset acquisition modules for storage in the asset module storage thereof; automatically establish a link between the received first interest rates and repayments of one or more further sets of repayments for the respective asset acquisitions, the link comprising one or more further interest rates; and automatically determine values of repayments of one or more further sets of repayments for the respective asset acquisitions on the basis of the established link, the values comprising a percentage of one or more further borrowed portions, and communicate the determined values to the respective asset acquisition modules for storage in the asset module storage thereof; and automatically determine values of repayments of one or more sets of additional payments for the respective asset acquisitions on the basis of the received percentage increases and communicate the determined values to the respective asset acquisition modules for storage in the asset module storage thereof.

Description

System For Managing a Portfolio of Asset Acquisitions

TECHNICAL FIELD

[0001] The present invention relates generally to asset acquisition.

[0002] Although the present invention will be described with particular reference to acquisition of a tangible asset such as real estate, it will be appreciated that the invention may be used to facilitate the acquisition of any asset, including intangible assets, fixed assets, current assets, and other forms of short or long term investments. Furthermore, the invention has application in the management of a portfolio or collection of asset acquisitions.

[0003] Throughput the specification, unless the context requires otherwise, the word "comprise" or variations such as "comprises" or "comprising", will be understood to imply the inclusion of a stated integer or group of integers but not the exclusion of any other integer or group of integers.

[0004] Furthermore, throughout the specification, unless the context requires otherwise, the word "include" or variations such as "includes" or "including", will be understood to imply the inclusion of a stated integer or group of integers but not the exclusion of any other integer or group of integers.

[0005] Additionally, throughout the specification, unless the context requires otherwise, the words "substantially" or "about" will be understood to not be limited to the value for the range qualified by the terms.

BACKGROUND ART

[0006] Each document, reference, patent application or patent cited in this text is expressly incorporated herein in their entirety by reference, which means that it should be read and considered by the reader as part of this text. That the document, reference, patent application, or patent cited in this text is not repeated in this text is merely for reasons of conciseness.

[0007] The following discussion of the background to the invention is intended to facilitate an understanding of the present invention only. It should be appreciated that the discussion is not an acknowledgement or admission that any of the material referred to was published, known or part of the common general knowledge of the person skilled in the art in any jurisdiction as at the priority date of the invention.

[0008] Homeownership confers benefits both to individuals and to society as a whole. Not only is a home an asset providing a homeowner with financial benefits such as increased wealth, homeowners are more likely to:

• enjoy increased life satisfaction (through, for example, attaining a goal of owning a home, and maintaining and improving their home to suit their personal tastes);

• enjoy improved psychological and physical health, including higher self-esteem and perceived self-efficacy or control over life (through, for example, social status and personal freedom associated with homeownership, being less likely to be subjected to problems related to inadequate heating and/or cooling, having an asset that can be used to pay for improved health care, and having the security of tenure);

• positively contribute to the overall health of society by staying in their homes longer and seeking to protect their economic and emotional investments in their communities. This may result in participation in voluntary and political activities, and improved school performance and other socially desirable behaviors amongst children of homeowners; and

• use equity built up or home equity to create collateral for providing opportunity to further promote household wealth or engage in business or entrepreneurial activity.

[0009] Recently, however, homes have become less affordable, particularly in Australia. In this regard, reports by Demographia on International Housing Affordability (Wendell Cox et al. 7th Annual Demographia International Housing Affordability Survey: 2011 , p2) rank many Australian cities amongst the most "Severely Unaffordable" in the developed world.

[0010] Pressures on costs of living and higher overall rents have made barriers to entry for home ownership higher and in addition the accrual of required deposit equity significantly more challenging and less affordable for prospective homebuyers. It has been reported that, in the case of Australia, "Five years ago it took First Home buyers an average of 3.8 years to save for a deposit," whilst presently, "In capital cities on overage it would take a first time buyer couple 4.5 years to save a deposit to purchase their first home." (Bankwest Financial Indicator Series - Third Annual First Time Buyer Deposit Report", August 2011 , (Bankwest.com/mediacentre) Accessed, September 2011.) "The average first home buyer respondent takes 4.7 years to save their deposit.", (QBE , Lmi Barometer (April 2012).)

[0011] Barriers to home ownership have been exacerbated by the tightening of credit policies by banks and other financial institutions post the late-2000s financial crisis, which may also be referred to as the Credit Crunch or the Global Financial Crisis. "CBA Tightens screws on lending", (Herald Sun March 9, 2010, UBS report, as cited in The Adviser 05, April 2012.)

[0012] This declining affordability in recent years has led to the need for home

ownership solutions driven, at least in part, by household demand for lower repayments on loans for homes and for more affordable entry points for borrowers to address initial deposit gaps to avail of home ownership. Deposit or asset assistance remains one of the most potent forms to convert renters to home owners.

[0013] In Listikin Et Al. 2002, The Potential and Limitations of Mortgage Ownership in Fostering Homeownership in the United States, it is disclosed that providing a $10,000 asset supplement would raise the share of renters able to afford a modestly priced house with a GSE Standard Mortgage from 9.2 percent to 35.6 percent." Almost a fourfold increase. Listikin further discloses that whilst this tool is potent the cost to Government to provide such measures would be enormous and likely unsustainable. In today's terms the cost of such assistance indexed to housing prices would be

enormous.

[0014] The Australian Government instigated the First Home Owners Grant (FHOG) in July 2000 which was aimed at an injection of wealth for all eligible first home buyers. This has been followed by varying the amount of FHOG or First Home Owners BOOST to stimulate housing markets. There has been some commentary and criticism of this approach as it is believed to have led to the bidding up of prices at market entry price points in at least some areas. FHOG has been deemed successful in assisting people transition the deposit gap, however Wood Et Al, 2009 discloses that "FHOG will help most of the 17.7% of first home buyers with binding deposit constraints" and that "Among those with binding repayment constraints, the maximum amount they can borrow is on average $70,000 short of what they need, so even FHOG at $ 14,000 is insufficient to bridge this shortfall."

[0015] Particularly, housing affordability solutions that aim to attract capital to

successfully enable home ownership to those currently beyond its reach are in great need to the extent that the Parliament of Australia engaged a Senate Select Committee on Housing Affordability in Australia, 2008 (Parliament of Australia, Senate Select Committee on Housing Affordability in Australia, 2008)

www.aph.gov.au/senate/commitee. Accessed 2 September 2011) tabling a series of recommendations and findings, in outlining the housing affordability problem.

[0016] Many parties have used various structures to add to traditional bank funding or mortgages to enhance affordability. They usually consist of a primary funder (normally a bank) and a secondary source of capital by way of equity or debt funds from an investor or subsidies from Government. In an effort to decrease risks to an acceptable level for mortgage funders such as banks, varying parties have employed products and methods that enhance affordability by involving third party equity investment in some way either as a source of loans or in co-ownership with customers. Indeed some Governments have taken to funding such structures as they fall outside general banking guidelines, such as, for example, in the case of Keystart Loans in Western Australia.

[0017] In short, the drive for affordability and market entry becomes a function of passing part or all of the liability for the home owners mortgage (the risk) or obtaining external equity or debt to contribute to the transaction in some form via a third party in return for either: a) A form of deferred return or proposed return on equity, real or notional, from

private or capital markets that may be linked to the overall property value i.e. Private shared equity or Rent to buy schemes. b) A form of moral trade off "net benefit" for little to no apparent financial gain in the case of a guarantee by a parent or the use of Government underwritten loan schemes, grants or shared equity offerings.

[0018] In either case the extra capital or commitment serves to decrease risk to the funder and/or its insurers in order to meet strict prudential guidelines that underpin Australia's banking system and enable procurement of a loan by a borrower by overcoming equity or income constraints for a given household. Similarly such loans are in turn governed by strict risk and credit regulation parameters as well as practical measures of affordability.

[0019] The effort to control the risk, complexity and legality of many equity introduction and management methods has led to many quite confusing consumer propositions and some very complex and costly capital raising structures for banks, lenders and ultimately consumers. Most fail to address both the widening deposit gap and ongoing affordability.

[0020] These structures generally require a large capital contribution to cover a significant deposit or commitment (defined as circa 20% of the property value) by the investor, Government or mortgage participants to function in the hands of major banks, funders and insurers. Restrictions are imposed due to banks regulatory and prudential requirements, and relate to product performance uncertainty or in many cases the policies of their appointed mortgage insurance companies to whom banks outsource risk to comply with their statutory obligations and regulators.

[0021] Many of these types of hybrid ownership/mortgage structures used to extract investment into alternate ownership contain, create or cause other legislative impacts such as the loss of Government entitlements in the case of co-ownership for first home buyers or contain complex legal documents that create significant risks to banks, their insurers and consumers alike, or in fact cause "bidding up" of home prices or repayments as a trade off for equity invested.

[0022] The complexities of current hybrid structures and timing of potential returns make access to home loans for any underlying mortgages and capital (investors) to fund such structures scarce. Returns or risks on many structures are somewhat unpredictable or at the least somewhat unusual and hence corporate or market investors are hesitant. In reference to a private shared equity scheme the following was reported:

"The problem that we have... is that those assets are not really appropriate assets for a bank balance sheet because the cash flow associated with them is lumpy and it comes in at the end when people decide to sell the home...What we really need to be able to continue with those products is access to patient capital that does not have the same cash flow demands as a bank might have." (Mr M Hirst, Bendigo & Adelaide Bank, Committee Hansard, 23 April 2008, p. 9. As cited in Select Committee on

Housing Affordability in Australia June 2008.)" [0023] Investors interests are often misaligned or directly in conflict to those of borrowers (maximisation of investment returns against affordable market entry), meaning any scheme with retail investors tends to chase higher yielding property assets or return, often in areas that do not promote affordability for participating borrowers.

[0024] Banks and other lenders are governed largely by returns to shareholders and annual reporting periods as well as investment structures seeking stable, predictable and constant income streams, and hence regular fixed mortgage payments that amortise the loan over time. A major issue for younger housing market entrants in general is that their mortgages are highest when their incomes are lowest, as incomes increase relatively over time due to both inflation and lifecycle income growth as earning capacity generally rises with age. Current mortgage and other lending structures do not address this mismatch and the significant burden it places on younger families.

[0025] There are numerous reports calling for solutions to housing affordability and the investigations and employment of varying forms of capital that reduce home ownership entry and mortgage burdens to home owners.

[0026] It is against this background that the present invention has been developed. SUMMARY OF INVENTION

[0027] The present invention seeks to overcome to at least some extent, or at least ameliorate, one or more of the deficiencies of prior art, or to provide the consumer with a useful or commercial choice.

[0028] Other advantages of the present invention will become apparent from the following description, taken in connection with the accompanying drawings, wherein, by way of illustration and example only, preferred embodiments of the present invention are disclosed.

[0029] According to a first broad aspect of the present invention, there is provided a system for managing a portfolio of asset acquisitions, each asset acquisition being associated with a respective asset module comprising an asset module controller and asset module storage for storing asset module software for controlling the asset module controller and storing asset module data, the asset module data comprising: details of a value allocated to the asset, the value comprised of one or more asset components; details of a first portion of the value borrowed from a first lender; and details of one or more further portions of the value borrowed from one or more further lenders, a total of the first portion and the one or more further portions equaling the value allocated to the asset so that the asset can be acquired; values of a first set of repayments to be made to the first lender, the first set of repayments being associated with the borrowed first portion; values of one or more further sets of repayments to be made to the one or more further lenders in respect of the one or more further portions, each of the one or more further sets of repayments being associated with a respective one of the one or more further borrowed portions; and values of one or more sets of additional payments to be made to the one or more further lenders, each of the one or more sets of additional payments being associated with a value of at least one of the asset components; the system being operably coupled to communicate with each asset module and comprising:

a system controller; and

system storage for storing system software for controlling the system controller;

wherein the system controller is operable, under control of the system sdftware, to:

receive input data comprising: details of first interest rates associated with respective asset acquisitions of the portfolio and being a percentage of the borrowed first portion; and details of percentage increases in the value of the at least one asset component associated with respective asset acquisitions of the portfolio from an initial value;

automatically determine values of the repayments of the first set of repayments for the respective asset acquisitions on the basis of the received first interest rates and communicate the determined values to the respective asset acquisition modules for storage in the asset module storage thereof;

automatically establish a link between the received first interest rates and the repayments of the one or more further sets of repayments for the respective asset acquisitions, the link comprising one or more further interest rates;

automatically determine values of repayments of the one or more further sets of repayments for the respective asset acquisitions on the basis of the established link, the values comprising a percentage of the one or more further borrowed portions, and communicate the determined values to the respective asset acquisition modules for storage in the asset module storage thereof; and automatically determine values of the repayments of the one or more sets of additional payments for the respective asset acquisitions on the basis of the received percentage increases and communicate the determined values to the respective asset acquisition modules for storage in the asset module storage thereof.

[0030] Preferably, the system controller and/or at least one of the asset module controllers comprise computer processing means.

[0031] Preferably, the system comprises input means via which the input data is receivable. The input means may comprise at least one sensor operable to facilitate the inputting of data into the system. The at least one sensor may be operable to sense a touch and/or gesture of a user, and preferably comprises at least one of a keyboard and touchscreen.

[0032] Preferably, the system comprises a display for displaying a user interface. The user interface may be operable to display the input data and/or the automatically determined values.

[0033] According to a second broad aspect of the present invention, there is provided a system for managing a loan for acquiring an asset, the system comprising a controller; storage for storing software for controlling the controller, and data; a display for displaying a user interface; and input means; wherein the controller is operable, under control of the software, to: receive input data via the input means, the input data comprising: details of a loan borrowed from a lender, the loan comprising at least a portion of a total amount required to acquire the asset; details of a first repayment agreement for determining a first amount of a first repayment to be made to the lender; and details of a second repayment agreement for determining a second amount of a second repayment to be made to the lender; determine a first amount of the first repayment according to the first repayment agreement; determine a second amount of the second repayment according to the second repayment agreement; and display the first amount and the second amount via the display.

[0034] Preferably, the controller comprises computer processing means.

[0035] Preferably, the input means comprises at least one sensor operable to facilitate the inputting of data into the system. The at least one sensor may be operable to sense a touch and/or gesture of a user, and preferably comprises at least one of a keyboard and touchscreen.

[0036] Preferably, the input data received comprises data confirming the making of the first repayment and/or the second repayment, and the controller is operable, under control of the software, to determine a loan amount outstanding on the basis thereof, and to display the loan amount outstanding via the display.

[0037] The first repayment may be one of a set of first repayments. The system, via the controller under control of the software, may be operable to determine an amount of each repayment in the set of first repayments according to the first repayment agreement, and to schedule the repayments according to a first payment schedule. Similarly, the second repayment may be one of a set of second repayments. The system, via the controller under control of the software, may be operable to determine an amount of each repayment in the set of second repayments according to the second repayment agreement, and to schedule the repayments according to a second payment schedule. The first/and or second payment schedule may comprise periodic

repayments, and may be identical.

[0038] Preferably, the total amount, optionally along with or plus any of an equity or equity amount, may equal a value of the asset. The asset may comprise one or more asset components. The system, via the controller under control of the software, may then be operable to determine the value of the asset on the basis of value(s)

respectively associated with or of each of the one or more asset components.

[0039] In a preferred form, the asset comprises real estate property. The asset components may comprise a value of land on which a house of the real estate property is built and a value of the house. [0040] Preferably, the first repayment agreement is associated or linked with a separate agreement to repay an additional loan for an additional loaned amount. The controller, under control of the software, may be further operable to automatically establish the link. The additional loaned amount, optionally along with or plus any of a deposit and/or equity amount, may comprise a remaining portion or balance of the total amount required to acquire the asset. Preferably, the separate agreement requires the payment of an interest or fee which is a factor or percentage of the additional loaned amount. In such a case, the first repayment agreement may require an interest or fee paid to the lender as a factor or percentage of the interest or fee required under the separate agreement. The system, via the controller under control of the software, may then be operable to determine the first amount of the first repayment by multiplying the factor or percentage by the percentage of the interest or fee required under the separate agreement by the loan amount outstanding. Preferably, the factor or percentage is equal to 50%.

[0041] Preferably, the second repayment agreement comprises a variation in the value associated with a component of the asset from an initial asset component value. The variation may be an increase or a percentage or partial entitlement to an increase in the value of the associated asset component from the initial asset component value. When the asset comprises a real estate property, it is preferred that the variation comprises a percentage increase or other measure of growth in value of land of the real estate property.

[0042] According to a third broad aspect of the present invention, there is provided a method for managing a loan for acquiring an asset, the loan borrowed from a lender and comprising at least a portion of a total amount required to acquire the asset, the method comprising the steps of: storing software for controlling a controller; and controlling the controller via the software, to: receive input data which is inputted via an input means, the input data

comprising: details of the loan; details of a first repayment agreement for determining a first amount of a first repayment to be made to the lender; and details of a second repayment agreement for determining a second amount of a second repayment to be made to the lender; determine a first amount of the first repayment according to the first repayment agreement; determine a second amount of the second repayment according to the second repayment agreement; and display the first amount and the second amount via a display.

[0043] Preferably, the method further comprises making a first repayment to the lender, the first repayment being for the determined first amount, and making a second repayment to the lender, the second repayment being for the determined second amount.

[0044] Preferably, the input data received comprises data confirming the making of the first repayment and/or the second repayment, and the method further comprises controlling the controller via the software to determine a loan amount outstanding after either repayment, and to display the load amount outstanding via the display.

[0045] The first repayment may be one of a set of first repayments. Each repayment in the set of first repayments may be determined according to the first repayment agreement, and may be made according to a first payment schedule. Similarly, the second repayment may be one of a set of second repayments. Each repayment in the set of second repayments may be determined according to the second repayment agreement, and may also be made according to a second payment schedule. The first and/or second payment schedule may comprise periodic repayments, and may be identical.

[0046] Preferably, the total amount, optionally along with or plus any of an equity or equity amount, may equal a value of the asset. The asset may comprise one or more asset components. The value of the asset may then be determined on the basis of value(s) respectively associated with or of each of the one or more asset components.

[0047] In a preferred form, the asset comprises real estate property. The asset components may comprise a value of land on which a house of the real estate property is built and a value of the house. [0048] Preferably, the first repayment agreement is associated or linked with a separate agreement to repay an additional loan for an additional loaned amount. The additional loaned amount, optionally along with or plus any of a deposit and/or equity amount, may comprise a remaining portion or balance of the total amount required to acquire the asset. Preferably, the separate agreement requires the payment of an interest or fee which is a factor or percentage of the additional loaned amount. In such a case, the first repayment agreement may require an interest or fee paid to the lender as a factor or percentage of the interest or fee required under the separate agreement. The first amount of the first repayment may then be determined by multiplying the factor or percentage by the percentage of the interest or fee required under the separate agreement by the loan amount outstanding. Preferably, the factor or percentage is equal to 50%.

[0049] Preferably, the second repayment agreement comprises a variation in the value associated with a component of the asset from an initial asset component value. The variation may be an increase or a percentage or partial entitlement to an increase in the value of the associated asset component from the initial asset component value. When the asset comprises a real estate property, it is preferred that the variation comprises a percentage increase or other measure of growth in value of land of the real estate property.

[0050] According to a fourth broad aspect of the present invention, there is provided a method for acquiring an asset, the method comprising: storing software for controlling a controller; and controlling the controller via the software to: receive input data which is input via an input means, the input data comprising: details of a value allocated to the asset, the value comprised of one or more asset components; details of a first portion of the value borrowed from a first lender; and details of one or more further portions of the value borrowed from one or more further lenders, a total of the first portion and the one or more further portions equalling the value allocated to the asset or a residual value of the asset over any equity contributed to acquisition so that the asset can be acquired; determine a first set of repayments to be made to the first lender, the first set of repayments being associated with the borrowed first portion; determine one or more further sets of repayments to be made to the one or more further lenders in respect of the one or more further portions, each of the one or more further sets of repayments being associated with a respective one of the one or more further borrowed portions; determine one or more sets of additional payments to be made to the one or more further lenders, each of the one or more sets of additional payments being associated with a value of at least one of the asset components; and display the determined first set of repayments, the determined one or more further sets of repayments, and the determined one or more sets of additional payments, via a display.

[0051] According to a fifth broad aspect of the present invention, there is provided a system for acquiring an asset, the system comprising: a controller;

storage for storing software for controlling the controller, and data;

a display for displaying a user interface; and

input means;

wherein the controller is operable, under control of the software, to:

receive input data which is inputted via the input means, the input data comprising: details of a value allocated to the asset, the value comprised of one or more asset components; details of a first portion of the value borrowed from a first lender; and details of one or more further portions of the value borrowed from one or more further lenders, a total of the first portion and the one or more further portions equaling the value allocated to the asset or a residual value of the asset over any equity contributed to acquisition so that the asset can be acquired;

determine a first set of repayments to be made to the first lender, the first set of repayments being associated with the borrowed first portion;

determine one or more further sets of repayments to be made to the one or more further lenders in respect of the one or more further portions, each of the one or more further sets of repayments being associated with a respective one of the one or more further borrowed portions;

determine one or more sets of additional payments to be made to the one or more further lenders, each of the one or more sets of additional payments being associated with a value of at least one of the asset components; and

display the determined first set of repayments, the determined one or more further sets of repayments, and the determined one or more sets of additional payments, via the display.

[0052] The first lender and/or the one or more further lenders may be the same entity.

[0053] Preferably, the asset comprises property. The asset components may comprise a value of land on which a house of the property is built and a value of the house.

[0054] Repayments of the first set of repayments may comprise a percentage of the borrowed first portion. The percentage may correspond to a first interest rate.

[0055] Repayments of the one or more further sets of repayments may comprise a percentage of the one or more further borrowed portions. The percentage may correspond to one or more further interest rates, and may be linked to the interest rate on the first set of repayments. The controller, under control of the software, may be further operable to automatically establish the link.

[0056] Payments of the one or more sets of additional payments may comprise a percentage of an increase in the value of the at least one asset component from an initial value. In one embodiment of the invention, payments of the one or more sets of additional payments may comprise an investment return calculated as a percentage based on a percentage increase or growth in value of land.

[0057] According to a sixth broad aspect of the present invention, there is provided a method for managing a portfolio of asset acquisitions, the method comprising: associating each asset acquisition with a respective asset module comprising an asset module controller and asset module storage for storing asset module software for controlling the asset module controller and storing asset module data, the asset module data comprising: details of a value allocated to the asset, the value comprised of one or more asset components; details of a first portion of the value borrowed from a first lender; and details of one or more further portions of the value borrowed from one or more further lenders, a total of the first portion and the one or more further portions equaling the value allocated to the asset so that the asset can be acquired; values of a first set of repayments to be made to the first lender, the first set of repayments being associated with the borrowed first portion; values of one or more further sets of repayments to be made to the one or more further lenders in respect of the one or more further portions, each of the one or more further sets of repayments being associated with a respective one of the one or more further borrowed portions; and values of one or more sets of additional payments to be made to the one or more further lenders, each of the one or more sets of additional payments being associated with a value of at least one of the asset components; storing system software for controlling a system controller; and

controlling the system controller via the software to: receive input data comprising: details of first interest rates associated with respective asset acquisitions of the portfolio and being a percentage of the borrowed first portion; and details of percentage increases in the value of the at least one asset component associated with respective asset acquisitions of the portfolio from an initial value; '

[0058] According to an eighth broad aspect of the present invention, there is provided a computer-readable storage medium on which is stored instructions that, when executed by a computing means, causes the computing means to perform the method according to the third, fourth, or sixth broad aspects of the present invention as hereinbefore described.

[0059] According to a ninth broad aspect of the present invention, there is provided a computing means programmed to carry out the method according to the third, fourth, or sixth broad aspects of the present invention as hereinbefore described.

[0060] According to a tenth broad aspect of the present invention, there is provided a computer program, including at least one instruction capable of being executed by a computer system, which implements the method according to the third, fourth, or sixth broad aspects of the present invention as hereinbefore described.

[0061] According to an eleventh broad aspect of the present invention, there is provided a data signal including at least one instruction being capable of being received and interpreted by a computing system, wherein the instruction implements the method according to the third, fourth or sixth broad aspects of the present invention as hereinbefore described.

BRIEF DESCRIPTION OF THE DRAWINGS

[0062] In order that the invention may be more fully understood and put into practice, a preferred embodiment thereof will now be described with reference to the

accompanying drawings, in which:

[0063] Figure 1 depicts a system diagram of an embodiment of a system in accordance with an aspect of the present invention;

[0064] Figure 2 depicts a computer of the system depicted in Figure 1 ;

[0065] Figure 3 depicts a processor and a storage device of the computer depicted in Figure 2; " [0066] Figure 4 depicts example calculations of Investor Return Rates according to the embodiment of the invention;

[0067] Figure 5 depicts an example of an ongoing repayment of a loan arrangement according to the embodiment of the present invention compared with a traditional loan arrangement;

[0068] Figure 6 depicts an overview of a scheme structure of the loan arrangement of the embodiment of the present invention; and

[0069] Figure 7 depicts a system diagram of an embodiment of a system for managing a portfolio of asset acquisitions in accordance with an aspect of the present invention.

DESCRIPTION OF EMBODIMENTS

[0070] In the drawings, like features have been referenced with like reference numbers.

[0071] In Figure 1 , there is depicted an embodiment of a system 10 for acquiring an asset in accordance with an aspect of the present invention. In the embodiment, the system 10 is provided by a provider under the trade mark SMART FAMILIES™. The system 10 of the embodiment is owned by Ιηηονβ Financial Solutions Pty Ltd and operated by Bluebay Finance Pty Ltd under the product name Smart Families™. The system 10 facilitates the acquisition of an asset by a customer, user or client, who may be referred to as a borrower, thereof who does not have sufficient funds to purchase the asset without borrowing or being lent an amount of money from one or more lenders, who may also be referred to as funders. In the embodiment described, the asset is a tangible asset in the form of a real estate property and has a value comprising one or more asset components. The asset components comprise a value of land on which a house of the property is built and a value of the house.

[0072] As a consequence of their financial resources, to have sufficient funds to purchase the asset, the borrower is required to borrow a first portion of the value from a first lender, and/or to borrow one or more further portions of the value from one or more further lenders and/or in addition to the above borrowing contribute equity to the transaction, a total of the first portion and the one or more further portions and any equity contributed equaling the value allocated to the asset so that the asset can be acquired by the borrower. [0073] The first lender may be a bank or other financial institution having a credit policy that will permit an amount of money equal to the first portion (less than the value of the asset) to be lent to the borrower.

[0074] The one or more further lenders may be relatives of the borrower (such as the borrower's parents), an employer of the borrower, or other investor(s), who are prepared to loan respective one or more further amounts of money equal to one or more further portions of the value to the borrower so that, when combined with the amount of money lent by the first lender and any equity from the borrower, the borrower has an amount of money sufficient to purchase the asset.

[0075] The system 10 is operable to facilitate the borrower making a first set of repayments to the first lender, the first set of repayments being associated with the borrowed first portion, and amounts or values of repayments of the first set of repayments being determined according to or on the basis of a repayment agreement or criteria; making one or more further sets of repayments to the one or more further lenders in respect of the one or more further portions, each of the one or more further sets of repayments being associated with a respective one of the one or more further borrowed portions, and amounts or values of repayments of the one or more further sets of repayments being determined according to or on the basis of a further repayment agreement or criteria; and making one or more sets of additional repayments to the one or more further lenders, each of the one or more sets of additional

repayments being associated with a respective one of the one or more further borrowed portions, and amounts or values of repayments of the one or more sets of additional repayments being determined according to or on the basis of an additional repayment agreement or criteria.

[0076] In this manner, the embodiment of the present invention seeks to provide a financial alternative for home ownership entry and maintenance. Particularly, and as will be described in further detail below, it seeks to provide a method for the calculation of interest on a loan (or mortgage or other debt) such that it promotes a method of increasing affordability in the hands of a borrower by encouraging contributions of capital not otherwise held by the borrower to contribute to ownership and maintains a lower than acceptable minimum repayment more affordable to the borrower in the short term and better matching future cash flows to the borrower over their lifecycle. From a capital investment perspective the alternative provided by the embodiment performs in a method similar to many traditional investments and familiar to potential investors. From a lending and regulatory point of view the embodiment of the present invention seeks to provide comfort and assurance to the first lender and the one or more further lenders of the borrower's ability and capacity to more easily maintain agreed repayments in order to acquire the asset. Further the preferred method gives comfort to the first lender that the one of more further lenders may only vary arrangements within agreed parameters so as not to adversely affect the borrower's ability to service and repay the first lenders loan. That is, in the embodiment, the loan (or mortgage or other debt) rates are linked. In preferred embodiments of the invention, the system 10 is operable to establish the link automatically. In embodiments of the invention where there are more than one link, all of the links may be established automatically.

[0077] As will be described, the embodiment seeks to create an ongoing interest dividend to an investor in a loan (or mortgage or other debt) from a borrower at an interest rate that is potentially lower than would otherwise be acceptable to the investor as a direct result of the added potential for a future Investor return as a result of any growth in the land value of the asset at the point of any repayment or reduction to the loan (or mortgage or other debt). This future return may be referred to as Return on Investment Amount. In embodiments of the invention, the future investment return may comprise an interest.

[0078] The embodiment provides a methodology for borrowers to return incremental Return on Investment Amounts at intervals, voluntarily as and when they can afford to, to an investor in a loan (or mortgage or other debt) product with net personal benefit to the borrower in the form of a reduced Return on Investment charge on future growth in value (if any) of the underlying land component of any security for such a loan (or mortgage or other debt).

[0079] The embodiment provides a methodology to capture a number of easily accessible capital sources by combining two investment return events to widen the number of patient investors willing to participate to enhance housing affordability and ownership opportunities to aspiring home owners, without major impacts on existing banking and lending systems, regulation or compliance. The embodiment of the system is designed to generate methodology that is extremely flexible and can be utilized in tandem with existing funders and insurers systems products and policies with less restriction than many alternative methods currently available and at lower levels of equity contribution from investors and with a larger contribution to overall property value provided by the underlying first lender to encourage affordable home ownership and close the deposit gap.

[0080] As will be described in further detail, the embodiment of the invention seeks to improve access by aspiring homeowners to forms of "patient capital" to enable more affordable entry points to the housing market with lower barriers to entry in a widely acceptable and easily comprehensible methodology.

[0081] As described above, in alternative embodiments of the invention, assets other than, or additional to, real estate properties may be acquired, including intangible assets, fixed assets, current assets, and other forms of short or long term investments, for example.

[0082] The system 10 comprises a plurality of components, subsystems or modules operably coupled via appropriate circuitry and connections to enable the system 10 to perform the functions and operations herein described.

[0083] As depicted in Figure 1 , the system 10 comprises a set of system and application software (software set) stored and run on a computer 12 as depicted in Figure 2. The software, which may be referred to as an "app" when provided as an application, can be downloaded from a website (or other suitable electronic device platform) or otherwise saved to or stored on storage of the computer 12. Software in the software set, or any set of electronic instructions or programs for the computing components of the system 10, including the asset module software as hereinafter described, can be written in any suitable language, as are well known to persons skilled in the art. Software in the software set can be provided as one or more stand-alone applications, via a network, or added as middle-ware, depending on the requirements of the implementation or embodiment.

[0084] In alternative embodiments of the invention, the software may comprise modules and may be implemented in hardware. In such a case, for example, the modules may be implemented with any one or a combination of the following technologies, which are each well known in the art: a discrete logic circuit(s) having logic gates for implementing logic functions upon data signals, an application specific integrated circuit (ASIC) having appropriate combinational logic gates, a programmable gate array(s) (PGA), a field programmable gate array (FPGA) and the like.

[0085] The computer 12 can be of any suitable type, including a personal, notebook or tablet computer such as that marketed under the trade mark IPAD® by Apple Inc, or a smartphone, such as that marketed under the trade mark IPHONE® by Apple Inc., a dedicated server or networked servers.

[0086] In the embodiment described, the computer 12 includes display means in the form of a monitor or visual display 14, a container such as a box 16 for housing various, operabiy connected components of the computer 12 such as a motherboard, processing means, disk drives and power supply of the computer 12, and input means such as a keyboard 18 and other suitable peripheral devices such as a mouse (not depicted). Together, the display 14, keyboard 18 and other peripheral devices provide a user interface or Human or Man Machine Interface (HMI) to enable a human user or operator to interact with the software set via a Graphical User Interface (GUI).

[0087] Referring to Figure 3, a system controller in the form of processing means of the computer 12 includes a central processor 20. The computer 12 also includes system storage comprising a storage means, device or medium such as a memory device 22 for the storage and running of software, including the software of the software set. The processor 20 is operabiy coupled to the memory device 22. The processor 20 is operable to perform actions under control of the software of the software set, as will be described in further detail below, including processing/executing instructions and managing the flow of data and information through the computer 12. For example, the processor 20 can be any custom made or commercially available processor, a central processing unit (CPU), a data signal processor (DSP) or an auxiliary processor among several processors associated with the computer 12. In embodiments of the invention, the processing means may be a semiconductor based microprocessor (in the form of a microchip) or a macroprocessor, for example.

[0088] In embodiments of the invention, the storage can include any one or combination of volatile memory elements (e.g., random access memory (RAM) such as dynamic random access memory (DRAM), static random access memory (SRAM)) and nonvolatile memory elements (e.g., read only memory (ROM), erasable programmable read only memory (EPROM), electronically erasable programmable read only memory (EEPROM), programmable read only memory (PROM), tape, compact disc read only memory (CD-ROM), etc.). The storage medium may incorporate electronic, magnetic, optical and/or other types of storage media. Furthermore, the storage medium can have a distributed architecture, where various components are situated remote from one another, but can be accessed by the processing means. For example, the ROM may store various instructions, programs, software, or applications to be executed by the processing means to control the operation of the reader and the RAM may temporarily store variables or results of the operations.

[0089] Where the words "store", "hold" and "save" or similar words are used in the context of the present invention, they are to be understood as including reference to the retaining or holding of data or information both permanently and/or temporarily in the storage means, device or medium for later retrieval, and momentarily or

instantaneously, for example as part of a processing operation being performed by the system 10.

[0090] Additionally, where the terms "system", "device", and "machine" are used in the context of the present invention, they are to be understood as including reference to any group of functionally related or interacting, interrelated, interdependent or associated components or elements that may be located in proximity to, separate from, integrated with, or discrete from, each other.

[0091] The use and operation of computers using software applications, HMIs and GUIs, is well-known to persons skilled in the art and need not be described in any further detail herein except as is relevant to the present invention.

[0092] In the embodiment described, the software set comprises: an operating system (not shown); and a loan application 24 relating to loans (or mortgages or other debts). The loans (or mortgages or other debts) are associated with amounts of money from the one or more further lenders lent to one or more borrowers.

[0093] Any suitable communication protocol can be used to facilitate the communication of information or data between components of the system 10, and between the system 10 and other devices and systems, including wired and wireless, as are well known to persons skilled in the art and need not be described in any further detail herein except as is relevant to the present invention.

[0094] In this preferred embodiment of the invention, the HMI comprises user input means in the form of the keyboard 18 and mouse, which are implementations of sensing means operable to sense a touch and/or gesture of a user to provide the input. The computer 12 is operable to receive at least a portion of the information or data to be stored entered as an input via the user input means. In embodiments of the invention, at least a portion of the information or data may be received from another device or system in communication with the system 10.

[0095] It should be appreciated that the user input means is not limited to comprising a keyboard and mouse, and in alternative embodiments of the invention any appropriate device, system or machine for receiving input, commands or instructions may be used, including, for example, a touchscreen, keypad, pointing device, or composite device. In the case where the input means comprises a touchscreen, the touchscreen is operable to sense or detect the presence and location of a touch wjthin a display area. Sensed "touchings" of the touchscreen are inputted to the computer 12 as commands or instructions, information or data.

[0096] Data or information received by the computer 12, for example inputted by an operator via the HMI, or communicated by a device, is stored in a database 26.

[0097] The loan application 24 comprises logic that is operable to generate a loan for a borrower. The loan application 24 is further operable to manage the loan, including holding secure all aspects of transactions associated with the loan to mitigate fraud or system modification, allocate values variables associated with the loan on the basis of information or data that is received, processed or transformed, and to facilitate payments to relevant parties to the loan, in addition to other actions, as will be described in further detail below.

[0098] The loan application 24 is also is operable to deliver data, information and content relating to the SMART FAMILIES™ product and system, home ownership, and the loans, and to receive data or information via a set of dedicated electronic pages or screens, via the HMI.

[0099] One of the pages that may be accessed comprises a loan application page. The loan application 24 is operable to enable an authorised person of the provider to approve an application by a borrower for a loan and to register or record the borrower in the system 10 by completing and submitting to the computer 12, via the loan application page, a communication in the form of an electronic loan application form comprising borrower registration information. The borrower registration information includes details or data relating to the loan and the borrower, including name(s) of the borrower, physical/postal/electronic address details, details of the asset being acquired, and financial details such as amount of money being applied for, details of lender(s) and amount(s) of money to be provided by each, income, and amount of present debts. To mitigate against fraud, as part of the registration process, the borrower may also be required to submit evidence supporting the information provided, such as, for example, copies of pay slips. The use of electronic pages and the inputting and reading of data therefrom is well known to persons skilled in the art and need not be described in any further detail herein except as is relevant to the present invention.

[00100] In embodiments of the invention, a borrower may apply for a loan by generating and communicating a request for the same (including the borrower registration information) via an online loan application page of a dedicated website.

[00101] The database 26 is coupled to the computer 12 and is in data communication therewith in order to enable data to be read to and from the database 26, as is well known to persons skilled in the art. Any suitable database structure can be used. The database can be provided locally as a component of the computer 12 (such as in the memory device 22) or remotely such as on a remote server, as can the set of software. In an embodiment, several computers can be set up in this way to have a network client-server application. There is at least one database for the system 10 in the embodiment described - the database 26 - and it is stored in the memory device 22 of the computer 12. In alternative embodiments of the invention, there may be more than one database.

[00102] The database 26 has a plurality of client or customer records. Each client record comprises a set of user information relating to a registered borrower or user of the system 10 including the borrower registration information as hereinbefore described, along with loan entries associated with the registered borrower or user.

[00103] The system 10, via the processor 20 under control of relevant applications of the software set, is operable to generate, populate and manage borrower records in the database 26, and to execute actions as described herein according to the data and information received and processed, including transformed from one (or a first) state to another (or second) state, by the computer 12.

[00104] The above and other features and advantages of the embodiment of the invention will now be further described with reference to the system 10 in use. In this regard, Figure 6 of the drawings depicts an overview of a scheme structure of the loan arrangement of the embodiment.

[00105] The system 10 is provided as a loan (or mortgage or other debt) product that may provide a return to investors or funders and which can be utilised in a plurality of ways. In the following example of use of the embodiment of the invention, a loan provided in accordance with an aspect of the invention comprises a mortgage investment accompanying a mortgage provided by the first (or primary) lender as a second mortgage arrangement. It should be appreciated that the invention is not limited to such an arrangement, however, and in alternative embodiments of the invention additional and/or alternative lending or financial arrangements or structures may be adopted.

[00106] The product provides a solution in situations where an amount that a borrower is able to borrow from a single lender, such as a bank, is insufficient for the asset desired to be purchased or where the tolerance of the borrower to repayment required on a traditional loan is such that the borrower is concerned for affordability.

[00107] For example, in the case of a young borrower having capacity to make repayments on a loan of $1850 per month (maximum), the maximum amount that a bank is prepared to lend the borrower, on the basis of lending criteria including an income of the borrower and payment "if the borrower were to hold a 10% deposit of the loan amount, is $250,000, but the price (i.e. value) of an asset comprising a small two bedroom home desired to be purchased is $270,000. The borrower has neither the deposit nor the means to borrow the entire amount to acquire the home. The price of the home comprises a land value component of $120,000 and a house value component of $150, 000. Even if another party, such as a parent or other relative, of the borrower is able and prepared to guarantee (act as a guarantor for) the loan, so that the bank will waive the requirement for payment of 10% deposit of the loan amount (as allowed under its lending criteria), the amount that can be borrowed is still less than the price of the asset as repayments are too high to afford such an amount. This situation is summarised in Table A below.

TABLE A - PROBLEM

Term 25 years, (Interest rate = 7.5%).

[00108] The borrower applies for a loan by approaching and providing relevant information to an authorised person of the provider who uses the system 10 to solve this problem. The solution is summarised in Table B below.

TABLE B - SOLUTION

*Term 25 years. (In erest rate Non-Bank =7.5%, Smart Families = 0.5 x 7.5% = 3.75%)

[00109] In Australia, a lender in a credit contract must, as a commercial transaction, be able to vary the rate of interest charged on a loan. In the described embodiment an authorised person of the provider or any or other designated manager or system administrator is appointed by the lender(s) to regulate this function in order to access the system 10.

[00110] Whilst the lender can vary the rate they will only be able to do so within parameters agreed between the relevant parties to provide a solid base for banks, funders and lenders mortgage insurers to rely on and base risk assessment. This is an important consideration to the availability and assessment of credit for any first mortgage provided in conjunction with a second mortgage to the lender.

[00111] Upon receipt of the information or data inputted via the electronic loan application form, the processor 20, under control of the loan application 24, of the computer 12 is operable to process the received borrower registration information to determine whether the loan is to be approved. The processing comprises comparing the borrower registration information with lending criteria. If the lending criteria are satisfied, then the loan is approved. If the lending criteria are not satisfied, then the loan is not approved.

[00112] If the loan is approved, then the processor 20, under control of the loan application 24, of the computer 12 is operable to generate a loan entry for the borrower, the loan entry comprising a set of variables associated with the loan and containing loan information, and to record details of the same in a corresponding loan record in the database 26. In the embodiment described, the set of loan information for the loan includes:

• a unique identifier associated with the loan;

• a term or duration variable associated with the loan. A value allocated to the term or duration variable comprises a length of time within which the loan must be repaid;

• an accounting period variable associated with the loan. A value allocated to the accounting period variable comprises a measure of how much of the term or duration of the loan has elapsed or passed;

• details of the asset;

• a loan amount variable. A value allocated to the loan amount variable comprises the total amount lent to the borrower by the first lender and the one or more further lenders and remaining to be repaid. Initially, in the embodiment described, this is equal to the value of the asset at the time the loan is applied for (i.e. during the initial or first accounting period). In alternative embodiments of the invention, the initial value of the loan amount variable may be more or less than the value of the asset, depending on the amount required to be borrowed by the borrower (in light of personal savings, for example); • an asset value variable associated with the asset. A value allocated to the asset value variable is determined on the basis of values allocated to one or more asset component variables. In the embodiment described, the asset component variables comprise a value of the land on which the house of the property is built and/or a value of the house for a respective value of the accounting period variable. In the situation described, for the initial accounting period these amounts are $120,000 and $150,000, respectively, giving a total value of $270,000 for the asset value variable initially;

• details of the first (or primary) lender. If the borrower has already arranged to borrow a portion of the amount required from the first lender and included the associated details in the submitted borrower registration information, then the system 10 is operable to populate the loan record with the provided details. If such has not occurred, then the system 10 is operable to allow selection of an appropriate first lender (from lenders that the provider has entered into prior agreements with) and to populate the loan record accordingly. In the present example, a non-bank lender is selected as the first lender;

• a first portion value variable associated with the first portion borrowed from the first lender. A value allocated to the first portion value variable comprises the amount lent to the borrower by the first lender and remaining to be repaid, and may be referred to as a Principal Balance (First Lender). As described above, if the borrower has already arranged to borrow a portion of the amount required from the first lender and included the associated details in the submitted borrower registration information, the system 10 is operable to populate the loan record with the provided details. If such has not occurred, then the system 10 is operable to facilitate the selection of an appropriate amount from the first lender (according to prescribed lending criteria) and to populate the loan record

v accordingly. In the situation being described, the system 10 selects an amount of $230,000 for an initial value of the accounting period variable;

• details of the one or more further lenders. If the borrower has already arranged to borrow one or more further portions of the amount required from one or more further lenders (such as a parent, relative, friend, or employer, for example) and included the associated details in the submitted borrower registration information, then the system 10 is operable to populate the loan record with the provided details. If such has not occurred, then the system 10 is operable to allow selection of an appropriate one or more further lenders (from further lenders that the provider has entered into prior agreements with, such as investors, or private capital held by the provider itself, for example) and to populate the loan record accordingly. In the present example, the system 10 selects the provider itself as the further lender;

• one or more further portion value variables, each associated with a respective one of the one or more of the further portions borrowed from the one or more further lenders. Values allocated to each of the one or more further portion value variables comprise the respective amounts lent to the borrower by each of the one or more further lenders and remaining to be repaid, and each may be referred to as a Principal Balance (Further Lender). As described above, if the borrower has already arranged to borrow one or more further portions of the amount required from one or more further lenders and included the associated details in the submitted borrower registration information, then the system 10 is operable to populate the loan record with the provided details. If such has not occurred, then the system 10 is operable to facilitate the selection of an appropriate amount from the one or more further lenders (according to prescribed criteria) and to populate the loan record accordingly. In the situation being described, the system 10 selects an amount of $40,000 for an initial value of the accounting period variable;

• a first repayment value variable associated with the first portion borrowed from the first lender. A value allocated to the first repayment value variable, in the embodiment described, depends on an agreement between the borrower and the first lender regarding one or more requirements, terms or conditions for repayment of the first portion (Principal Balance (First Lender)). The one or more requirements, terms or conditions may be any that are acceptable to the parties concerned, and may comprise, for example, interest only payments or principal and interest payments to the first lender as a percentage of the debt to the first lender over a period of time at a rate. In the embodiment described in the present example, the one or more requirements, terms or conditions comprise a principal and interest payment over 25 years at a variable interest rate of 7.5% per annum of the value of the first portion value variable, resulting in repayments of $1 ,700 per month for an initial value of the accounting period variable; a set of further repayment value variables, each associated with a respective one of the one or more further portions borrowed from the one or more further lenders. Values allocated to each of the set of further repayment value variables are determined according to or on the basis a first repayment agreement or criteria. In the embodiment described, this comprises an ongoing return or interest payable to each of the one or further lenders, which may have the form of, and be referred to as, "Ongoing Interest". This is interest to be repaid on the relevant outstanding principal sum of a loan (or mortgage or other debt) having regard to criteria which may be a desired constant (preferably a factor or percentage of a standard variable rate of a specified financial product, or a nominated loan or index value such as the Consumer Price Index) as nominated or specified in a loan agreement between the relevant parties such as the lender and borrower, or mortgagee and mortgagor, as appropriate. In the embodiment described, this is linked to repayment criteria comprising an underlying, nominated or prescribed constant for the accounting period of the one or more requirements, terms or conditions for repayment of the first portion as outlined in the loan agreement between the first lender and the borrower. In alternative embodiments of the invention, terms for repayment may be set out in an agreement with another or alternative party or partner such as the provider or other mortgage manager, for example. In the case of a second mortgage this could be an underlying first mortgage rate of the first or primary lender. Using a specific constant or agreement between the investor and the manager or the borrower and/or the lender to regulate the transaction is advantageous as it gives the underlying first lender (i.e. the first mortgagee or debtee) some certainly about performance in the hands of the borrower to ensure predictable and thus insurable and risk assessable outcome. This is advantageous to allowing banks, lenders and lenders mortgage insurance providers certainty in relation to potential borrower repayments on the second mortgage and ensures the borrower can demonstrate the ability or capacity to adequately service the first mortgage loan ongoing as required by lenders and their regulators. In the embodiment described, this "ongoing interest" is lower than standard interest rates, although this could be modified for other uses. In the present example, the amount payable to the further lender comprises a factor of 50% applied to a nominated constant being the rate associated with repayment of the first portion for the accounting period. It is, accordingly, 3.75% (50% of 7.5%) per annum of the value of the further portion value variable, resulting in repayments of $125 per month for an initial value of the accounting period variable. Different factors may be used in alternative embodiments of the invention; a set of additional payment value variables, each associated with a respective one of the one or more further lenders, a value allocated to each additional payment value variable being determined according to or on the basis a second repayment agreement or criteria. This comprises a value of at least one of the asset components, and particularly the land on which the house of the property is built in the embodiment described. In the embodiment described, this constitutes a further repayment component, which may be referred to as a further "Return on Investment " component payable to the one of the one or more further lenders (i.e. the investor(s)) voluntarily (voluntary payment having been adopted as standard terminology by banks and legal counsel) at the borrowers discretion and based on growth of the land component of the property (which may be held as collateral security for a loan, primarily for use in construction where land and home are purchased as separate components, but not limited to such). In the embodiment, the system 10 is operable to establish and apply the land component by a breakdown of house and land values as determined and provided by the purchase price of the components and/or a nominated valuation method agreed between parties in the terms of a loan agreement, and conducted by a licensed property valuer or suitable automated valuation method and entered into the database 26. In the embodiment, growth or increase in the land drives the Return on Investment Amount and there is advantageously no need to undertake any complex assessment of improvements to any property. Enhancing the property through improvements will benefit the borrower directly in overall equity growth. The embodiment of the invention thereby provides a method of calculation of the Return on Investment Amount that is recalibrated each time a voluntary repayment is made and a Return on Investment Amount and/or principal is repaid, according to a specific reference to be known as the

Investment Return Rate (IRR) over time as the borrower can afford to. Each voluntary repayment triggers a recalculation of the IRR by the system 10, which dictates and determines the quantum of Return on Investment Amount to be charged to the account of the borrower. (As explained in further detail below, the Investment Return Rate always decreases with any repayment over and above the ongoing interest charge for any period reducing the potential Return on Investment Amount payable as a result of growth in future periods. This is unique to the embodiment of the invention). This allows the borrower to contribute capital and reduce the Return on Investment Amount and the Investor Return rate payable on future growth (if any), allowing and encouraging overall eventual repayment of the loan and ultimate ownership of the asset, as will be described in further detail below; and

• details of a transaction account of the borrower holding money in respect of

which transactions may be processed to make any determined repayments.

[00113] The system 10 is operable, via the processor 20 under control of the loan application 24, to perform the following actions to determine a quantum or amount of the Ongoing Interest to be repaid on the outstanding Principal Balance (Further Lender). In the embodiment described, this occurs for each value of the accounting period variable equal to one month for the term of the loan. In alternative embodiments of the invention, this action may occur for other values of the accounting period variable, such as at the end of a prescribed accounting period, or another or prescribed date or interval as nominated and agreed by a lender and a borrower in a loan agreement:

1 ) Retrieve from the database 26 data comprising: an ending balance of the

Principal Balance (Further Lender) sum owing on the loan by the borrower to the further lender at the end of the accounting period; the factor to be applied to the nominated constant as contained in the loan agreement that is to be applied; the nominated constant. to which the factor is to be applied to determine the interest rate to be charged to the borrower by the further lender for the given period; the method of interest calculation contained or specified in the loan agreement between the borrower and the further lender; and an optional tolerance factor specifying parameters of tolerance for any manual repayment to the facility. The tolerance factor applied in the embodiment described as Ongoing Interest is charged in an "interest only" method based on the principal sum. The tolerance factor is set in the system 10 to ensure that the system 10 is operable to accept payments within a certain range of the expected or anticipated Interest Only repayment to allow for rounding errors or customers paying very small amounts of principal in excess of the interest only sum. This ensures ongoing interest payments are accepted to allow for rounding errors and small overpayments, but does not unduly reduce the principal sum over time on which the investor may be due a "Return on Investment Amount". Alternatively, in embodiments the system may be operable to accept only direct debit type repayments and to generate batches and retrieve payments directly from customer accounts for the desired sum. ) Conduct a test or assessment of the nominated constant retrieved to determine whether it satisfies one or more prescribed conditions. In the embodiment described, the prescribed condition comprises whether the retrieved nominated constant is greater than or equal to zero. This test is to ensure that any underlying loan or constant used to determine a factor or interest rate has not ceased to exist (i.e. that any underlying loan, such as that between the borrower and the first lender, used as a reference has not been repaid). ) In a case where the prescribed condition is not satisfied, that is a reading of false is returned from the processing (i.e. the nominated constant >=0=false), the system 10 is operable to generate and communicate a message of the result to an operator of the system 10, such as a system administrator, via the HMI. The system administrator can then take appropriate action, such as, for example, reviewing and entering or inputting into the database 26 a default rate as determined by the agreement to produce a new constant. ) In a case where the prescribed condition is satisfied, that is the processing determines that the nominated constant satisfies the test (i.e. the nominated constant >=0=true), the system 10 is operable to multiply the factor by the nominated constant to generate the interest rate to be applied for the value of the accounting period and to store the generated interest rate in the database 26. ) Process, which may include transforming, the generated interest rate for the accounting period and the ending balance of the Principal Balance (Further Lender) in accordance with the retrieved method of interest calculation to determine the interest payable by the borrower for the period. In the embodiment described, this comprises a multiplication of the relevant parameters. ) Conduct a test or assessment of the generated interest payable to determine whether it satisfies one or more prescribed conditions. In the embodiment described, the prescribed condition comprises whether the generated interest payable is within or satisfies the retrieved tolerance factor for repayments to the loan account.

7) In a case where the prescribed conditions are not satisfied, that is the tolerance factor is exceeded, the system 10 is operable to generate and communicate a message of the result and of an according potential breech of the terms of the agreement to the system administrator. The system administrator can then take appropriate action. No further repayments to the loan will be permitted by the system 10 until the matter is resolved, with the system 10 being operable to test that any repayment made to the loan account renders the account balance within a level of tolerance for the required repayment only and to reject any balance of repayment not within the level of tolerance (generating a message to the system administrator as described above). Again, alternative embodiments of the invention may have the system generate direct debit repayments acquired by the lender from a nominated borrower account and a tolerance factor in such a system may be unnecessary. A dishonour process familiar to a person skilled in the art may be employed to ensure repayments are made.

8) In a case where the prescribed conditions are satisfied, the system 10 is

operable to process the required interest repayments to the loan in reduction of interest accrued in a typical manner for an interest only facility, conducting the necessary transaction in respect of the borrower's transaction account, and recording details of the same.

[00114] Table C below depicts an example of how an ongoing interest return may be calculated, in an embodiment of the invention where it is determined with reference to a constant applied to an underlying first mortgage rate of the first lender. As described previously, in embodiments of the invention, this constant could relate to an index or other variable, or any one or combination of requirements, terms or conditions contemplated in an agreement between the respective parties. TABLE C - ONGOING INTEREST CALCULATION

[00115] In this example the borrower (as per the prior example depicted in Table A and Table B above.) has borrowed $ 40,000 and the resultant interest rate charged to the borrower by the lender is indexed at 0.5 of the first mortgage rate.

[00116] For illustrative purposes the mortgage interest rate has varied for several of the accounting periods in this example and the principal balance has remained constant. That is, interest only repayments have been made. In the embodiment described, additional repayment by way of principal reduction may occur at the discretion of the borrower only after the application of the Return on Investment Amount charged, if any, to any such repayment. Any such principal reduction would alter the principal sum and resultant ongoing interest repayments would be a function of the ongoing interest rate applied to the reduced principal sum for the period. In embodiments of the invention, there may be one or more limitations placed on additional repayments in the terms of the loan agreement and parameters such as the tolerance can be altered accordingly. [00117] The system 10 is operable to perform the following actions to determine a quantum or amount and the rate or frequency of the Return on Investment Amount payable by the borrower to the further lender in respect of any additional repayment (above the agreed tolerance for Ongoing Interest repayments) voluntarily applied to the loan (Further Lender) at any given, particular or prescribed point or moment in time and within any parameters or terms contained or permitted within the loan agreement between the relevant parties for the purpose of determining the Return on Investment Amount:

1. Retrieve from the database 26 data comprising: a current or present Principal Balance (Further Lender) sum owing on the loan by the borrower to the further lender outstanding at or about (prior to in the preferred embodiment described) the date of any actual or intended repayment to the facility net of any Ongoing Interest outstanding (the principal sum); the initial or commencement value of the land only asset component variable of the property (which may be held as collateral security for the principal sum of the loan) at or within a reasonable time frame of, the last non-Ongoing Interest" or "Voluntary Lump Sum" repayment to the loan account, as determined by the purchase price or valuation proximate to the last such payment denoting a break-down of asset components, being house and land values in the embodiment described, computed and provided by a Licensed Valuer or other authorised method using one or more valuation methods br techniques (such as, for example, replacement cost), specified or prescribed in the relevant loan agreement or an annexure thereto and inputted into the database 26; an amount of repayment to be applied to the loan (that is, to be applied to the loan (Principal Balance (Further Lender)) sum); a current or present value of the land only asset component variable of the property, established by a valuation as described above) at the time , immediately prior to or proximately prior to the voluntary payment made to the loan (Principal Balance (Further Lender)) amount; and the Investment Return Rate for any period in the case of periods subsequent to the first repayment (where it is calculated as described in step 2 below) and stored in the database 26 for all repayments subsequent to the first voluntary lump sum repayment. In the embodiment the loan account cannot be credited with a voluntary repayment and then the Return on Investment Amount charged and any principal reversed out. The borrower needs to notify the lender or the system 10 of the intention to make a repayment, the lender or system must calculate the Return on Investment Amount due, advise the borrower and obtain the borrowers permission to proceed.;

2. Perform processing, which may include transformation of data or information, in the form of an initial calculation in order to calculate and set the initial Investment Return Rate to be applied on or about the date or a proposed date prior to, the first non-Ongoing Interest" repayment to the loan (Principal Balance (Further Lender)) amount in the form of an initial calculation in order to calculate the initial Investment Return Rate which will be set as; the initial Principal Balance (Further Lender) sum divided by the commencement value of the land only asset component variable. The system 10 is operable to record or store the resultant generated as the Investment Return Rate for the current period in the database 26.

3. Perform processing/which may include transformation of data or information, to calculate a value for a Periodic Growth Index (PGI) land variable for the accounting period between the last voluntary lump sum repayment to the loan (further lender) and the current voluntary repayment corresponding to the current accounting period, by multiplying the Investment Return Rate current period by the current or present value of the land only asset component, then deducting from the resultant figure the full amount of principal outstanding on the loan (to the further lender) to determine the value of the Periodic Growth Index.

The Periodic Growth Index tracks paid and unpaid growth from prior periods as well as negative or positive growth over time reflecting the differential in the quantum of principal outstanding and the amount of any unpaid growth due to the investor and paid as a Return on Investment Amount in the event of borrower electing to make a voluntary lump sum repayment over and above ongoing interest repayments as a result of net growth in value of the land only asset component variable. The system 10 is operable to record and store the figure or value for the Periodic Growth Index in the database 26.

In embodiments of the invention it may be desirable to restrict any repayment of the Return on Investment Amount to an All or Nothing scenario, That is, the borrower must pay all of the Return on Investment Amount due to the investor for any given period in order to make a repayment or reduction to the principal sum and cannot make partial repayments of such or reduce the principal until this is done. In such embodiments, the borrower would elect to make a voluntary repayment(s), advise the lender of such, and the lender would in turn value the asset components and make calculations necessary to advise the borrower of the extent of the full charge of the Return on Investment Amount due, in the event the borrower would like to proceed with a voluntary lump sum repayment. The borrower would then have a nominated period to make a voluntary lump sum repayment, they may save this repayment in an offset account and then pay within a prescribed period or elect not to make a voluntary lumps sum repayment in which case no repayment or recalculation of the Investor Return Rate or Periodic Growth Index takes place. This process may be desirable to comply with relevant credit laws and simplify consumer explanation of the proposed invention.. In embodiments of the invention, part payment of growth features may be introduced over time.

The system of embodiments is operable to make a calculation of the proposed Return on Investment Amount at the request of a borrower. Such systems allow the calculation of any Return on Investment Amount and the subsequent Investor Return Rate, principal reduction, etc.. to be completed, recorded and stored in the data base , but not actioned. A voluntary Lump Sum payment advice is remitted to the borrower to be authorised advising the Return on Investment Amount due,(Return on Investment Amount Advice). If the customer elects to proceed and authorises the advice manually via the system 10, then, and only then, the system 10 will be operable to make the necessary calculation.

4. The system 10 is operable to perforrn processing, which may include transformation of data or information, to calculate the quantum of Return on Investment Amount to be charged to the account of the borrower in favour of the lender or repaid by the borrower for any given period between the last voluntary repayment to the loan and the current or proposed voluntary repayment to the loan (to the further lender) by testing on the basis of the value of any repayment made against certain criteria to establish the treatment of the repayment and the quantum, if any, of Return on Investment Amount to be applied to the account.

Where the value of the repayment applied or to be applied is less than or equal to the current value of the Periodic Growth Index land for the period (i.e. positive unpaid growth exists but it is greater than the amount of the repayment or proposed repayment), then the Return on Investment Amount is dictated by and limited to the repayment. The repayment, should the borrower elect to proceed, is recorded in the data base 26 as the Return on Investment Amount for the period and the appropriate adjustment is made to the loan account to reflect this and the charge is recorded. This test is significant in the embodiment described as it does not allow the amount of Return on Investment charge to exceed the repayment and ensures that there is no increase to the principal sum and thus the quantum of Ongoing Interest to be serviced by the borrower does not and cannot increase as a result of growth in the value of the land. There is no adjustment to the principal sum or the Ongoing Interest repayment.

Where the value of the repayment fails the test above (i.e. the amount of voluntary repayment is greater than any unpaid portion of growth denoted by the quantum of Periodic Growth Index) then the following test is applied to determine the quantum of Return on Investment Amount to be levied to the account should the borrower elect to proceed:

If the value of the Periodic Growth Index is greater than zero (i.e. there has been positive growth accrued but it is less than the repayment applied), then the Return on Investment charge becomes the amount of growth denoted by the Periodic Growth Index, This figure is recorded by the system 10 in the database 26 as the Return on Investment Amount for the period and any residual voluntary repayment after deduction of said Return on Investment Amount is applied as a reduction to the principal sum of the loan and the Ongoing Interest repayment is adjusted downward reflecting a decrease in the principal sum to the loan account (further lender). The system 10 is instructed by the loan application 24 and operable to record the resultant figures in the database 26 for the period.

If the value of the Period Growth Index fails the test above (i.e. is zero or less than zero and growth is negative) then the amount of Return on Investment charge for the period will be zero, the system 10 will then be operable to store the value of the resultant payment as principal applied and make the necessary adjustment to the loan account to the loan (further lender) including the application of the repayment to the principal sum in full to the account and a resultant adjustment to the Ongoing Interest repayment based on the new principal sum further lender and to record the resultant figures in the database 26 for the period. 5. Perform processing, which may include transformation of data or information, to recalculate the resolved Investment Return Rate. The system 10 is operable to store the resolved Investment Return Rate in the database 26 as the new Investment Return Rate for the subsequent period and the step is repeated, for each repayment period, by first testing the Periodic Growth Index, to determine if the Periodic Growth Index is positive, determined where the Periodic Growth Index is greater or equal to zero.

In this instance the revised Investment Return Rate is determined using the prior period Investment Return Rate to determine the value of the investors original capital investment adjusted for shares of growth (positive or negative), The system 10 is instructed by the loan application 24 and operable to multiply the Investment Return Rate prior period by the commencement value of the land for the period, then deduct from this figure the Return on Investment charge for the period, if any, calculated in step 3 above, and the amount of principal reduction to the loan after applying the residual repayment net of said Return on Investment Amount charged. The resultant figure is divided (by the system 10) by the current or present value of the land only asset component to establish the Resolved

Investment Return Rate The system 10 is operable to record this figure in the database 26.

Further the system 10, in determination of the revised Investment Return Rate, is operable to determine if the quantum of repayment is sufficiently large to have cleared all principal and growth accumulated (i.e.. the Return on Investment Amount plus principal applied minus accumulated growth is less than zero), and in this instance to set the Investor Return Rate to zero as the loan and any Return on Investment Amount as a result of growth will have been repaid. The system 10 is operable to record the appropriate figure as the Resolved Investor Return Rate in the database 26. Or:

Where the Periodic Growth Index is other than positive (i.e. negative) the system 10 is operable to calculate the Resolved Investor Return Rate in the following manner: The system 10 is operable to test if the quantum of voluntary repayment applied in any period exceeds the negative value (i.e. the absolute value of negative PG I) of • the Periodic Growth Index. If the repayment exceeds the "absolute value" or quantum of the negative Periodic Growth Index then the system 10 is operable to calculate the Revised or Resolved Investment Return Rate by the division of the Principal Sum End (further lender) divided by the current value of the land only asset component to determine the future Revised or Resolved Investor Return Rate, and to record the resultant figure in the database 26 as the Revised or Resolved Investor Return Rate, Or:

Otherwise the system 10 is operable to leave the Investor Return Rate unchanged and to record the current Investment Return Rate in the data base 26 as the Resolved Investor Return Rate.

This calculation step (Periodic Growth Index, other than positive) ensures that where property values have fallen to the extent where the Principal Sum (Further Lender), if the loan were to be repaid, would otherwise be greater than the sum of accrual of negative growth of the land asset component value and the Principal Sum outstanding (Further Lender), that the Investment Return Rate cannot be altered by a fall in property value to the detriment of the investor. The Principal Sum being that to which the investor is always entitled as a lender. In the embodiment described, the Principal must always be reduced in line with negative growth before the Resolved Investor Return Rate is impacted. This is unique to the embodiment of the invention and is advantageously done, in the embodiment described, to ensure that the investor is compensated adequately for future periods of positive growth following a fall in property values (negative growth and a negative Periodic Growth Index) and continues to receive compensation in the form of Return on Investment Amounts for periods of positive growth following periods of negative growth despite a reduction in the Principal Sum.

6. Conduct the necessary transaction in respect of the borrower's transaction account and record details of the same

[00118] Table D below depicts an example of Return on Investment Amount calculation based on a voluntary "repayment" to the loan account of the borrower. Multiple repayments are illustrated over multiple years of the loan.

Investment Interest Calculator

TABLE D - RETURN ON INVESTMENT AMOUNT CALCULATION [00119] It can be appreciated that, in the situation described, the borrower makes ongoing repayments to the one or more further lenders in two forms, as follows:

1. Monthly (Ongoing Interest) interest only payments to the provider at 50% (or an agreed constant) of the normal bank loan rate, i.e. 7.5% Normal rate x 0.5 = 3.75% Ongoing Interest rate

a. i.e. $40,000 x 3.75% / 12 = $125 per month

2. Periodic Voluntary Lump sum repayments are paid at the option of the borrower and a Return on Investment Amount or Charge is levied based on growth of the land only component of the asset relative to the investors principal investment or growth on the investment contributed and adjusted for part payments of any such growth or indeed principal returned over time and reflected in future periods through the use of the Investment Return Rate. If there is no or negative growth, then there is no Return on Investment Amount payable.

If the land value increases from $AUD120000 to $AUD140000 over 3 years the Return on Investment Amount due on sale (assuming no repayments apart from ongoing interest), would be as follows: i.e.$AUD40,000/$AUD120,00b =0.3333 (Investment Return Rate) for original period.

0.3333 x $20,000 Periodic Growth (AU$140,000 - AU$120,000)=

AU$6,666 or Periodic Growth Index or Return on Investment Amount payable on sale.

[00120] Return on Investment Amounts are based on the Investment Return Rate which calculates the investor's share of growth of the land component only, resulting in Return on Investment Amounts as well as adjusting for the value of principal repaid and both are linked to the value of the land component only and not the entire value of the asset. In this case the land has grown by $ AUD 20,000 or about 16.75% over 3 years and the Return on Investment Amount (if repaid on sale) is 1/3 of this. Return on Investment Amounts charged depend on growth.

[00121] In the embodiment described, the Return on Investment Amount is due and payable when any voluntary lump sum repayment is made (over and above Ongoing Interest) assuming there is growth. Repayments in excess of monthly interest are optional in the embodiment described. The faster the loan is repaid, the less Return on Investment Amount is payable over time on any future growth and the lower the Investment Return Rate set. (less growth shared).

[00122] Any voluntary repayment to the loan account triggers the calculation or application of the Return on Investment Amount charge (provided there is growth) and the unique adjustment of the Investment Return Rate to account for contributions to the loan by the borrower to reduce the quantum of Return on Investment Amount charge payable in future periods, as a result of further growth, particularly in the case where a repayment is not sufficient to clear any growth for the period.

[00 23] This is done uniquely by an adjustment to the Investment Return Rate applied in any given period. The Investment Return Rate is recalculated for any voluntary repayment each time a voluntary payment is made and updated for periodic values of land.

[00124] The Investment Return Rate reduces each time some portion of growth has been paid to the investor or some portion of principal has been returned at any point or time where there is positive periodic growth or a reduction in principal sum greater than the value of any negative periodic growth (i.e. in event of a falling value of the land asset component). Voluntary lump sum repayments can be made in varying amounts (as agreed) and can be accumulated in an offset account with the first lender, saving interest on the borrower's loan along the way. It must be noted that the Investment Return Rate cannot increase in the embodiment described.

[00125] The Investment Return Rate is a reflection of adjustments in periodic growth on a portion of the land value component of a property and is utilised to calculate the Return on Investment Amount due for the period. In the embodiment described, any voluntary lump sum repayments to the loan are first applied to pay any Return on Investment Amount (due where growth has occurred and in the ratio dictated by the Investment Return Rate) for any period and the relevant Periodic Growth Index. Any residual voluntary lump sum repayment left, after repaying the Return on Investment Amount is applied to the principal sum. Each time a Voluntary Lump Sum repayment is paid, whether or not is repays the entire amount calculated, only an amount not exceeding the sum of the Voluntary Lump Sum repayment paid by the borrower is charged to the borrower's loan account as the Return on Investment Amount.

[00126] Returns on Investment Amounts are charged only to the extent that a borrower elects to make a repayment. No Return on Investment amount is charged unless a repayment is made.

[00127] The Return on Investment Amount (as determined by the Investor Return Rate) adjusts for the next period depending on the amount of repayment so that the borrower does not pay for the same growth twice. That is, each Return on Investment Amount repayment lowers the quantum of Investor Return Rate. The faster capital is returned, the less Return on Investment Amount is repaid and the lower the Investor Return Rate.

[00128] In the case where the borrower elects to pay part of Return on Investment Amount along the way the Investor Return Rate simply shifts to accommodate the amount paid, no matter whether the sum covers all growth or not. In the case of the example above the Investment Return Rate initially is 0.3333. After repayment of $5,000 by the borrower a resolved Investor Return Rate is calculated. (Assuming overall positive growth and thus a positive growth index) the following occurs: i.e. 0.3333 (Investor Return Rate) x $ 140,000 (Current Land Value) =

46,662 - $5,000 Return on Investment Amount charged - Nil principal applied as payment did not exceed growth) = 41 ,662

41 ,662 / 140,000 = 0.2976 (Resolved Investor Return Rate).

[00129] This becomes the Investor Return Rate for next period.

[00130] Figure 4 of the drawings depicts example calculations of Investor Return Rates.

[00131] Continuing on with the described situation, after a couple of years the

borrower's income has risen and they have accumulated overpayments of around $10,000 in a home loan offset account. The borrower wishes to repay some of the further portion borrowed from the further lender (i.e. the loan from the provider). This scenario, in which the repayment is greater than the Return on Investment Amount charge, is summarised in Table E below.

TABLE E

[00132] Alternatively, after a couple of years the borrower's income has risen and they have accumulated overpayments of around $5,000 in a home loan offset account. The borrower wishes to repay some of the further portion borrowed from the further lender (i.e. the loan from the provider). This scenario, in which the repayment is less than the Return on Investment Amount charged, is summarised in Table F below.

Land Value Land Value Land Value

Unchanged Increases Decreases

Starting Land Value $ 120,000 $ 120,000 $ 120,000

Repayment Made $ 5,000 $ 5,000 $ 5,000

Land Value at $ 120,000 $ 140,000 $ 110,000

Repayment

Investment Return .3333 .3333 .3333

Rate

(IRR)

TABLE F

[00133] In the embodiment described, the system 10 is operable to action repayments and application of Return on Investment Amount charge as follows. Return on

Investment Amount charged is based on the Periodic Growth Index for a period. As any repayment or proposed repayment is applied to the loan the system 10 is operable to test a repayment and to determine the appropriate treatment of or action to be executed for such a repayment and the applicable Return on Investment Amount charged or, to be charged, based on growth. Where a Voluntary Lump Sum repayment exceeds growth, the Return on Investment Amount charged becomes the growth (PGI), where a payment is less than growth, but growth (PGI) is positive the payment becomes the Return on Investment Amount charged and where growth is negative no Return on Investment charge is applied to any payment. The Investor Return Rate (IRR) for each period is revised and used to track and determine the paid and unpaid shares of periodic growth due to the Investor and repayments applied to growth continually reduce the quantum of Return on Investment Amount charge for growth in subsequent periods. No matter how much is repaid and how much the land has grown in value every time a repayment is made the Investor Return Rate and thus the resultant Return on Investment Amount charged (or the growth the borrower pays away) either remains constant or reduces, it can never rise in the embodiment described.

[00134] An event or situation may occur where land decreases in value and a voluntary repayment is insufficient to cover any negative periodic growth incurred. In the embodiment described, this situation would cause the Investor Return Rate to be left unchanged until an amount of voluntary principal reductions (Voluntary Lump Sum repayments) had occurred to the extent that repayments of principal amounted to more than the negative growth reflected by the PGI before the system 10 allowed further adjustment in the Investor Return Rate.

[00135] The borrower could elect to repay only the monthly interest for the full term of the loan and repay the Return on Investment Amount as a lump sum on sale of the property in the future. In this case any Return on Investment Amount charged will rely on the value of the land at the point of sale as determined by a licensed valuer and inputted into the system 10. This strategy is not recommended and repayments and reduction of the further lender loan(s) is encouraged. However, it should be appreciated that in the event that no repayments have been made and the investor has invested twenty percent of land value, the child or borrower is still sharing in eighty percent (or 4 times) the investors' share of any growth and both parties are significantly advantaged.

[00136] In alternative embodiments of the invention, the required repayments may be determined in additional and/or alternative methods. For example, alternative

techniques may be used to combine the calculation of interest linked to a stable interest factor set against a particular nominated variable and an interest component linked also to the increase (or other variance) in value of an underlying asset class or percentage of such value, and the return may be tied to asset components or a percentage of asset components other than, or additional to, the land only value as established by a licensed valuer or approved automated valuation method as a consistent means to calculate the Return on Investment Amount to be charged. A licensed professional valuer is used to assess the market value (for input into the system 10) of each component of the property at any time, using methods widely accepted by banks and other lending institutions. Making the determination of the basis of the "land only" value is advantageous as it provides for the simple treatment of property improvements and allows for application of the system to many unique finance products and structures. Any improvements to the property are automatically accounted for by limiting any Return on Investment to the investor to growth in the value of land only. Any

improvements by the owner or borrower are automatically taken into consideration as overall equity in the property grows and there is no need for complex calculations to establish the nature, timing, and extent of improvements to the land/property. [00137] This aspect is advantageous in the simple treatment of property improvements, and also for the application of embodiments of the invention to many finance products and structures.

[00138] Linking the Return on Investment Amount charge via the Investor Return Rate to land only as a mortgage structure under the parameters contained within the described embodiment of the invention likely qualifies borrowers in Australia who may be assisted by a related party lender, to full entitlement to First Home Owners Grant and other State Government stamp duty exemptions, as it is not a form of co-ownership.

[00139] The Resolved Investor Return Rate calculation is a method of allowing the borrower to repay incremental returns that are linked to growth in the asset (property in the embodiment described), in part or in full in smaller sums than the accumulation of such a return linked to growth.

[00140] The adjustable nature of the Investor Return Rate and Return on Investment Amount charge based on the amount of any Voluntary Lump Sum repayment and the ability to roll and recalculate any portion of an unrealised Return on Investment Amount uncharged and reset the resolved Investor Return Rate is advantageous. This system of recalculation of the embodiment of the invention allows for the effective variance of Voluntary repayments of Return on Investment Amounts and principal reduction repayments by the borrower to suit their needs and affordability and allows repayments at less than the accrual of growth determined by the Investor Return Rate and Periodic Growth Index to be accepted without variance to the principal sum and underlying ongoing interest charge. In effect, the underlying principal sum does not grow as a result of Investor Return Amounts charged as the amount is only charged or realised in full or in part to the extent of a repayment to the loan is made except on sale or refinance. This is advantageous in obtaining wider lender acceptance of any second mortgage instrument as the Ongoing Interest payment required is stable and predictable and does not grow at an unspecified rate that may jeopardise the ability of a borrower to repay the loan by raising their repayments making them unaffordable.

[00141] No matter the size of the contribution by the borrower toward repayment of the principal or Return on Investment Amount during periods of positive growth (positive Periodic Growth Index) the net effect to the borrower is a reduced rate of accrual of the Return on Investment Amount (net loss of property growth) through the alteration of the Investor Return Rate. Although such repayment is not mandatory it furthers the borrowers interest where he or she can afford to contribute any capital, to take a greater component of future growth with respect to the property than would otherwise be paid as charges to the lender. Growth favours both parties in the embodiment described.

[00142] This incentivised system of repayment encourages borrower reduction of the overall facility particularly in periods of low growth where little to no Return on

Investment Amount charge may be due. This aspect of the embodiment of the invention further enhances investor participation as in periods of limited growth the return of principal is likely faster allowing other investment opportunities to be undertaken by the investor.

[00143] The original principal sum outstanding and the Return on Investment Amount paid on growth are a return on capital to the investor who does not participate in property depreciation and the debt remains outstanding regardless of equity decline. The investor only receives a Return on Investment Amount if the borrower experiences growth in the value of the land. There is no obligation to repay until sale or refinance of the subject loan and ongoing repayments may be significantly lower.

[00144] By tailoring the Ongoing Interest and Return on Investment Amount

components of the invention the embodiment of the invention strikes a balance between risk and return that can be adjusted to differing investor classes.

[00145] Ongoing Interest returns to investors in the embodiment of the invention are linked to some dependent factor (according to the first criteria), and the investor may receive dividends through charges linked to growth or a percentage of growth, at regular intervals or in a lump sum at some point in time triggered by a number of events such as loan term, principal reduction, periodic triggers or refinance or sale. These can be tailored in embodiments of the invention to target different investor groups or indeed different borrowers using different variables and values for each aspect of the invention to dial returns up or down to meet market demand.

[00146] The connection of the Return on Investment Amount calculation to a loan facility and return gives rise to alternative embodiments of the invention directed to

opportunities such as the development of a similar Investment model to be used for direct ownership of an asset such as property or acquisition of units in a unit trust or other structures that holds other assets.

[00147] Variations possible include: • Staple or ongoing return via rent on an asset component - tied to a rate or index in lieu of ongoing interest or a set fee or rent hedged to a Consumer Price Index (CPI) or land value(s).

• The variation in both the ongoing interest rate or charge and the ratio or

percentage payable linked to the one or more further loans and the return on investment percentage such that the product is tailored to meet different classes of investors or to emulate the performance of a co-ownership arrangement without many of the associated costs or mortgage liability for the primary owners mortgage.

• Direct property interest with Return on Investment adjustment mechanisms

applied to partial buyouts directly or through the use of companies or trusts, including real estate investment trusts, and managed investment schemes or funds or derivatives of such.

• Return on Investment charges levied according to criteria, such as only on

reaching a particular growth target or threshold, for example or in certain specific amounts or percentages.( i.e. Pay all growth or nothing for voluntary lump sum reductions).

• Superannuation funds investment via a trust structure or suitable managed

investment scheme for such assets or via investments in a rated structure via endowment warrants or similar.

• Acquisition of a home and lease of land with equity or hybrid ownership

structures.

• Shared equity structures for acquisition of assets linked to land only.

[00148] One application according to an embodiment of the invention is in the part payment of actual equity shares within a direct property transaction. In relation to a property where actual shares are held directly or on trust, the Return on Investment Amount charge recalculation mechanism could be .used to transact in a similar manner with partial reduction of equity and recalculation of shares in the manner set out in the described embodiment of the invention. This could be useful for superannuation funds, listed or unlisted property trust structures or government.

[00149] To facilitate understanding of the present invention, the preceding description has focussed on the case where the embodiment of the invention is applied to an individual loan for acquiring a single asset.

[00150] The situation becomes more complicated in scenarios where there is more than one loan and more than one asset being acquired, and application of the embodiment of the invention will now be described, with reference to Figure 7, where the system 10 is used to manage a portfolio or collection of asset acquisitions. As will be described, the linking of a first lender or funder to a provider or investor as a second lender or funder as is done in the embodiment of the invention provides advantages in overcoming problems associated with managing a portfolio or collection of assets being acquired.

[00151] For use in managing a portfolio of asset acquisitions, at least a portion of the database of the system 10 in the described embodiment is distributed across a plurality of asset modules 28, each of which the system 10 is operably coupled to communicate with. There is a plurality of asset acquisitions in the portfolio or collection, each associated with a respective loan having a respective set of loan information as hereinbefore described. The borrower(s) and details of the set of loan information may be different for each asset acquisition.

[00152] Each asset acquisition is associated with a respective asset module 28. In the embodiment, each asset module 28 comprises an asset module controller and asset module storage for storing asset module software for controlling the asset module controller and storing asset module data. The asset module data includes relevant information of the set of loan information of the corresponding asset acquisition as hereinbefore described. Particularly, the asset module data comprises: details of a value allocated to the asset, the value comprised of one or more asset components; details of a first portion of the value borrowed from a first lender; and details of one or more further portions of the value borrowed from one or more further lenders, a total of the first portion and the one or more further portions equaling the value allocated to the asset so that the asset can be acquired. The asset module data also comprises: values of a first set of repayments to be made to the first lender, the first set of repayments being associated with the borrowed first portion; values of one or more further sets of repayments to be made to the one or more furtheF lenders in respect of the one or more further portions, each of the one or more further sets of repayments being associated with a respective one of the one or more further borrowed portions; and values of one or more sets of additional payments to be made to the one or more further lenders, each of the one or more sets of additional payments being associated with a value of at least one of the asset components.

[00153] In the embodiment, the system controller is operable, under control of the system software, including the loan application 24, to: receive input data comprising: details of first interest rates associated with respective asset acquisitions of the portfolio and being a percentage of the borrowed first portion; and details of percentage increases in the value of the at least one asset component associated with respective asset acquisitions of the portfolio from an initial value;

automatically determine values of the repayments of the first set of repayments for the respective asset acquisitions on the basis of the received first interest rates and communicate the determined values to the respective asset acquisition modules 28 for storage in the asset module storage thereof;

automatically determine values of repayments of the one or more further sets of repayments for the respective asset acquisitions on the basis of the established link, the values comprising a percentage of the one or more further borrowed portions, and communicate the determined values to the respective asset acquisition modules 28 for storage in the asset module storage thereof; and

automatically determine values of the repayments of the one or more sets of additional payments for the respective asset acquisitions on the basis of the received percentage increases and communicate the determined values to the respective asset acquisition modules 28 for storage in the asset module storage thereof.

[00154] The preceding description regarding variations in implementation of the system controller and system storage of the system 10 is also applicable to the implementation of the asset module controller and asset module storage of each asset module 28. Each asset module controller may comprise any one or a combination of operably coupled computers or devices, which may comprise computer processing means. The asset module storage of each asset module 28 may comprise any one or a combination of operably coupled storage means, devices or mediums.

J

[00155] Using separate asset modules 28 may advantageously provide efficiencies in processing, with, for example, each asset module 28 being installed on a personal computer or as an app on a smartphone, with the relevant processing and calculations being performed in the cloud via cloud computing. Further security and privacy advantages may be provided by such an implementation in not keeping all data and information in a central database.

[00156] In embodiments of the invention, the asset modules may be physically and/or logically integrated with other components of the system 10, or they may be physically and/or logically separate therefrom.

[00157] This embodiment of the invention involves the primary variables that relate to the return on investment to the relevant lenders in the varying forms contemplated and as hereinbefore described, including:

1. repayments and returns to the respective first lenders of each asset acquisition via traditional interest (first interest rates);

2. repayments or returns to the one or more further lenders of each asset acquisition in the form of ongoing interest linked to the first lender rate (further interest rates) (or desired constant in embodiments of the invention); and

3. repayments or returns to the one or more further lenders of each asset acquisition linked to growth via the return on investment rate set as a percentage increase or growth in the value of at least one component of the one of one or more asset components to which the one or more further lenders may be entitled, particularly in the preferred embodiment limited to the land value only irrespective of the value of capital improvements where the asset comprises real estate property.

[00158] The system 10 of the embodiment of the invention solves significant problems in managing a collection of asset acquisitions by automatically linking and administering the pricing of the three required components as contemplated in the respective loan agreements by administering and varying the rates of traditional interest, ongoing interest and return on investment interest as well as repayments or variance to such payments as a result of items such as arrears rates and missed repayments on one or more of any of the components and attributable to one or more of the first lenders or the one of more further lenders to achieve the agreed return to all parties and the monitoring of variations to individual repayment agreements contemplated by the invention across a portfolio of loans.

[00159] The system 10 provides the ability to link a first lender to one or more further lenders in such way that the first lender can regulate or at least reliably predict the return to the one or more further lenders, and to link the one or more further lenders to two distinct returns in the form on ongoing cash flow and growth on the landed asset component, in the preferred embodiment.

[00160] It can be appreciated that_, a portfolio of assets may be accumulated over a period of time. The pricing of any portfolio of assets contains primarily the components stipulated by the methods contemplated in the embodiments of the invention as hereinbefore described amongst other data inputted into the system 10 to maintain relevant borrower and compliance information as familiar to persons skilled in the art.

[00161] A portfolio of loans for acquiring assets as contemplated by embodiments of the invention would contain multiple return on investment rates based on the varying contributions of equity arranged between the borrower(s) and the one or more further lenders, as agreed individually between the one or more further lenders and the borrower, as well as a multitude of the one or more further lenders with one or more further returns as a percentage of the borrowed first portions combined with one or more percentages or returns based on the quantum of capital invested and the return on investment rates and ongoing return rates associated with at least one of the one or more asset components and the variance of said returns on investment rates with the making of voluntary repayments triggering changes in said return on investment rates based on the quantum of repayment and any growth of the at least one of the one or more asset components.

[00162] As time progresses and changes to the respective rate on the borrowed first portion occur at varying degrees and intervals based on one or many of the one or more first loan lenders for the borrowed first portion, the system 10 is operable to determine and monitor the multitude of combinations of variance in the returns to the borrowed first portion and automatically trigger as required the agreed alteration to the returns to the further lenders in accordance with the parameters agreed in the loan agreement and retrieve from the borrowers a specified quantum of repayment of both ongoing interest and return on investment returns.

[00163] Portfolios of loans are subject to various pricing structures and margins that are decided by the managers or operators of the first loan lender in accordance with the lenders preferred rates of return or pricing. Returns can be priced both forward and backward on an asset portfolio by adjusting the required rate of return to existing customers (backward) or new customers (forward) as desired. This creates a multitude of rate variances across a multitude of first portion lenders in a multitude of loan tranches as a result of interest rate movements.

[00164] In the embodiment of the invention the return to the one of the one or more further lenders is proposed to be 50% of the return to the first lender, linked to the one or more further portions. However, as previously described, this may vary in alternative embodiments of the invention, and may be any percentage, including any percentage other than 50%.

[00165] In order to effect the required changes contemplated and agreed between parties to the agreement(s) under the invention it is necessary to compute and retrieve from the required combination of data contemplated to calculate both ongoing interest and the return on investment interest and apply a payment process to each individual loan, relating to multiple individuals with one or more first loan funders and at least one of one or more further loan funders at multiple ongoing interest rates and multiple return on investment rates determined as a result of the desired capital contribution of the at least one of the one of more further funders based on the initial contribution and adjusted via the return on investment rate if and when payment of principal and/or growth occur.

[00166] In embodiments of the invention, every loan not only has one interest rate, but effectively, three and whilst two out of three may be linked the third is individually dependent on each loan, its associated land component, the equity contributed, the growth factor particular to the individual lot and any alterations as a result of voluntary repayments.

[00167] The system 10, in the embodiment described, is operable to automatically resolve the infinite combinations of return on investment interest, varying ongoing interest or returns, linked to multiple numbers of first portion lenders (potentially banks) with multiple tranches of funds at multiple rates, priced both forward and backwards, which are used to instruct the system 10 to calculate multiple returns to be applied to the one or more further portions from the multiple lenders of the one of one or more further portions (peer to peer), linked to multiple payment agreements with multiple return on investment rates.

[00168] The physical permutations and characteristics of the invention involve complex and multiple variables and could not be realistically contemplated by human manual means due to the infinite number of variations in the numerous variables.

[00169] Particularly, the huge numbers of lenders contemplated as well as the varied return on investment rate applied to each second or further lender and the administration of repayments and collection of loan data for varying underlying first mortgage loan tranches, for potentially hundreds of lenders and borrowers in the manner described, could simply not be realistically contemplated without the use of the system 10.

[00170] Unlike traditional loan portfolios, the invention involves both multiple first portion lenders and potentially large numbers of multiple second portion lenders. The system 10 is responsible for administration of the portfolio, including management of varying repayments determined on the basis of traditional, ongoing, and return on. investment interest.

[00171] It will be appreciated that embodiments of the invention provide a system to encourage and obtain access to capital raised by ah investor by way of equity or debt to enhance home ownership affordability by addressing relevant factors through

structuring transactions to obtain the following benefits: Risk return for investors - reduce risks of returns on capital and complexities for investors to an acceptable and commercial level, perhaps subject to appropriate reinsurance of borrower default, attracting a wider array of investors.

As with any investment, an investment in a mortgage is no different and rests on two pivotal functions of risk versus return. As the risk of any investment grows (i.e. less predictable returns, greater default risks, greater uncertainty, more complexity), so too does the return required to attract investors. In other words "propensity to invest" or "investor willingness" is a function of risk versus return. This is especially true where one funders risk is dependent on another funder's product or performance.

Property investment is a relatively familiar medium to almost all mainstream investors and a readily used investment in Australia.

The general principle of investment for ongoing cash flow in the form of "rent" and potential future cash flow in the form of "capital growth" over time is familiar and understood.

The embodiment of the invention provides a commercial mechanism for investors to invest in an ongoing cash flow, that can be varied and dialled up or down and can be linked to interest rates or rents or the Consumer Price Index, with many risks such as vacancy, maintenance worries, rates and taxes, management fees, entry costs, agents fees, and tenant damage all but eliminated.

By obtaining Ongoing Interest from an invested home owner at a desired threshold rate, investors may emulate a return familiar to them and potentially improve overall outcomes with lower costs overall and potentially better short term yields with further prospects of longer term participation in future cash flows by way of further returns linked to the value of growth of the land.

The embodiment of the invention is structured such that in periods of lower growth (lower accumulation of Investment Returns) any principal reductions repaid by the borrower will be returned as principal or capital to the investor allowing the investor to reinvest in alternate, higher yielding investments in other areas. Further, the investor is secured by a second mortgage for their principal investment and is hedged somewhat from decline in asset values through property depreciation much like a bank as the underlying principal sum is repayable by the borrower. Appropriate structuring of underlying mortgages and clauses underlying default protocols between the first and second mortgagee can be tailored to minimise or reduce default risk.

There is no doubt risk in any second mortgage transaction. However, duly motivated investors such as parents, developers and builders will likely find the combination, simplicity and methodology of the invention a compelling investment alternative.

An insurance structure may be provided, for investors, for example, for downside principal risk to offset some or all of the risk of loss of capital under certain defined events, such as loss of employment by child causing repossession of the home, for example. Reduce the deposit gap - the product can be used to reduce the deposit gap for potential homebuyers to enter home ownership.

The embodiment of the invention can be used to reduce the deposit gap for potential homebuyers to enter home ownership. One of the largest imposts for prospective home owners is the accumulation of deposit towards property purchase. Recent studies by Bankwest Financial Indicator Series advise that it can take an average of 4 years for homebuyers to save the required deposit for ownership and potentially up to 5 years, dependent on their location. Research compared the figure to 3.8 years just five years ago.

It is evident that embodiments of the invention have been designed for, and can be used in conjunction with, current bank and mortgage insurance products to reduce this deposit impost required for a home. The product has been approved for use in Australia by both a wholesale f under and mortgage insurer under the brand SMART FAMILIES™ to assist ownership by bridging the deposit gap.

In Australia, Lenders Mortgage Insurance is cover required by lenders to provide risk cover for underlying mortgages where borrowers hold a deposit of less than 20% of a property value (around $80,000 on a $400,000 home). These policies cover the banks scarce capital which is regulated by the Australian Prudential Regulation Authority. In many cases funders will lend up to 90% or 95% of a property value reducing deposit required by borrowers with Lenders Mortgage Insurance (between $20,000 and $40,000 deposit). Even the accumulation of $40,000 from many households in addition to entry costs such as stamp duty and fees is problematic. Embodiments of the invention are designed to accompany and fit with Lender and Lenders Mortgage Insurance policies to enable it's use to reduce this deposit gap and also service a larger borrowing amount for a given income range thus promoting and sustaining more affordable market entry.

Embodiments of the invention may involve selection of assets permitted by investors that promote longer term growth in the hands of borrowers to benefit both parties to the transaction. This process must preferably be done within constraints of ensuring selection of affordable product specifically to maximize growth within the constraint of borrower needs not in isolation of borrowers who may be limited by affordability.

Investor and borrower interests are aligned in embodiments of the invention and any return on growth to the investor is ultimately a many times magnified return to growth for the borrower on the residual asset. Reduce the ongoing repayment for homebuyers/better match incomes and remove or reduce repayment constraints to market entry.

The embodiment of the invention reduces ongoing payments and increases and enhances affordability to obtain and maintain ownership, matching voluntary principal reductions to increased future earnings.

This is done by lowering the Ongoing Interest rate paid by the borrower on their loan to the lender to lower (50% lower in the embodiment) than would otherwise be possible.

The example depicted in Figure 5 of the drawings illustrates an ongoing repayment of lower (by $ 183 per month) than would be possible by borrowing on a standard mortgage arrangement and allows access to $ 50,000 in additional capital to put towards a home. The embodiment of the invention allows for a reduction of repayments which in turn allows the borrower to increase their capacity to repay by an additional $183 per month in the above example over a traditional loan.

The lower repayment in turn allows increased borrowing capacity to the borrower of around twice the capital than they could otherwise obtain from a bank, in the embodiment described.

In many cases the invention may allow borrowers to meet a minimum required threshold price point for home ownership of any type thus increasing affordability and access to housing.

A home owner availing of embodiments of the invention will make future reductions of principal at their discretion by way of income growth via indexation of earnings over time. As capacity to earn increases it is envisaged borrowers will refinance or repay Return on Investment Amounts in order to reduce growth shared with the investor in the future.

The embodiment of the invention is not designed to bid up property prices but to close the gap to an achievable level for home owners to enter into the market with a modest home. Increasing the number of ways which capital can be raised and managed simply, by expanding participants to include relatives such as parents, investors, self- managed superannuation funds, developers, and builders, and potentially

Government, for example.

Embodiments of the invention may be applied to varying investor bases. A first class of investor is a parent or relative who may have in the past provided equity in a home as guarantor for the mortgage of a child.

The provision of guarantees places substantial obligations on parents for no commercial return. Due to the lack of participation of lenders mortgage insurers in this space (for example, Genworth Financial assists only to 85% of value) the requirement and magnitude of a guarantee on a parent is usually around 20% of the equity in the proposed property to be purchased by a child but is not necessarily limited to such and can indeed be more in the event of default. A parent is essentially indebting themselves and their property for sums of around $80,000 to $100,000 at a time for no financial benefit. This creates challenges legally for both banks and guarantors.

Guarantor loans place significant obligations on a parent for no return and often restrict their ability to borrow for other investment opportunities or in some cases to move or upgrade homes. They are in many cases jointly and severally liable for a portion of the child's entire loan repayments.

Embodiments of the invention allow a parent to place relatively small capital investments in the hands of their child as a loan on commercial terms, managed or serviced by an independent party, which allows both parties to benefit mutually from the transaction.

In embodiments of the invention the transaction can be structured as a

commercial arrangement between a parent and child that allows both parties to participate in mutual gains on each side of the transaction.

A major benefit to parental participation is that small amounts of equity can be used and are acceptable to lenders and insurers without any form of guarantee. For example, for the same $ 100,000 equity commitment made for one guarantee a parent could assist up to five children for $ 20,000 each into home ownership and the parents themselves may receive a commercial return on their

investment. In the embodiment described the Smart Families™ system and the appointed manager of the provider manage all aspects of the Smart Families™ loan which has significant benefits in the form of reduced family conflict over exchange of moneys.

Other embodiments of the invention may involve an arms-length structure involving self-managed superannuation funds or third parties as investors in the structure or a managed investment scheme used to fund required investment and may also allow an option to raise capital for investment in the product via a limited recourse loan facility available to an approved investor.

Further employment of the structure by Government may see application in the replacement of land-rent type schemes which may be difficult to securitise by isolating a large component of funding to a traditional home loan model, which , given the correct second mortgage structure would allow first mortgage funding by banks and insurers and securitisation of the first mortgage tranche. Aim to place 100% ownership ultimately in the hands of the homebuyer - reducing Return on Investment Amounts paid on future growth through payments over time as ability to repay increases.

Embodiments of the invention seek to encourage ultimate ownership of any asset in the hands of the borrower.

Whilst the invention is not limited in regard to the amount that can be lent, in embodiments of the invention the system can be used to facilitate the

contribution of a maximum of 20 per-cent equity to any property transaction and preferably lesser sums to enable ownership. By limiting contributions to smaller sums the likelihood of full ownership to borrower over time increases.

In this manner, embodiments of the invention decrease entry points, magnifying likely conversion rates of renters into home ownership many times over, lowering both income (or binding repayment constraints) and deposit constraints significantly.

In alternative embodiments of the invention, such limitations are not required, for example when used for not for profit structures that require larger equity sums.

The advantageous structure of the embodiment of the invention allows flexibility for the borrower to make reductions of principal to the facility. The facility is such that any reduction over and above Ongoing Interest triggers the calculation of any Return on Investment Amount to be charged. An advantageous approach incorporated within the system that allows the amount of Return on Investment Amount charged to be equal to the amount of any repayment in the event of property growth. Where such a repayment eliminates all the investors share of growth the balance of repayment is applied to the principal sum. Where a repayment does not eliminate all growth monitored by the Investor Return Rate, a repayment is made and the Investment Return Rate and thus future Return on Investment Amounts charged as a percentage of any future growth are adjusted downward to account for the partial realisation of any growth repaid. All voluntary lump sum contributions from the borrower will continually reduce the amount and rate of Return on Investment Amounts payable over time allowing faster accumulation of growth (if indeed such growth has occurred) by the borrower. The embodiment of the system ensures all principal reductions are used to essentially minimise or eliminate Return on Investment Amounts over time to the investor and enhance full ownership by reduction of any mortgage or investor share by the borrower or owner. f) Maintain Government and other incentives for home ownership to the buyer.

Homeowners who currently cannot afford a property and enter into co-ownership arrangements with third parties, friends or relatives, are exposed to several legislative arrangements that may see them suffer loss of some Government benefits or entitlements

For example, in Australia, home owners seeking some guarantees or co- ownership are required by lenders to be on a title with a parent or other party and may currently forfeit their First Home Owners Grant entitlement as one party to the property is not a First Home Buyer. This event also eliminates any stamp duty concessions in most states. Involving a third party as an equity partner or co- investor in direct property can have significant detriment effect amounting to thousands of dollars, thus impacting home ownership opportunities.

Current investigations reveal that embodiments of the invention may allow First Home owner concessions coupled with participation in a commercial investment in the form of a loan (or mortgage or other debt) by further limiting any interest or future entitlement to growth to the land component of the property solely and structuring any link to growth as a return on a mortgage the loan agreement ensures that there is at no time any entitlement for the investor to occupy any dwelling financed under the embodiment of the invention and thus no equitable ownership interest in the property or home exists in a legal sense. g) Create a mechanism to allow banks and funders and mortgage insurers to utilise and adopt the structure to expand product offerings without the need for large equity contributions and with full support of mortgage insurance companies. Embodiments of the invention may be provided as a second mortgage to secure a given property in conjunction with a primary bank mortgage and are approved for such currently in Australia.

In such embodiments, the mortgage will not increase over time to the detriment of the banks security over any property. The voluntary nature of any Return on Investment Amount and the unique reducible nature of the Investor Return Rate, which cannot rise in embodiments, ensure the principal sum and thus monthly repayments do not increase except by variation on the terms agreed. In the embodiment, the repayments do not increase except in response to changes to the underlying nominated constant (ie. the banks variable rate). In countries where credit law requires the lender to be able to vary the rate, the invention may comprise arranging an agreement between the second mortgage lender and the system manager agreeing to allow the manager to regulate rates on behalf of the lender within parameters to ensure compliance with legal and bank requirements. The repayments by the borrower are predictable and perform similarly to the banks underlying mortgage rate and do not place the borrower in undue hardship or require repayment of the facility earlier than the bank's prime mortgage to the detriment of the borrower or bank.

The embodiment of the invention requires only interest only payments from the borrower for the duration of the loan term and the unique nature of the Return on Investment Amount charge and realisation only in events of repayment by the borrower, does not require a disproportionate percentage share of equity in land to accrue.

By ensuring compliance with lender and mortgage insurer conditions

embodiments of the invention can be coupled with primary funders and mortgage insurers.

Utilising standard products offered by banks and permitted by their insurers, yields the ability to couple standard bank mortgages with embodiments of the invention, reducing the deposit impost and binding repayment constraints on homebuyers who obtain a second mortgage via embodiments of the invention and increasing the number of potential participating lenders for first mortgage funding. No system changes for banks and funders - creation of a mechanism allowing banks and funders to adopt the structure without the need to make significant and expensive changes to systems and processes to participate.

The construction of the embodiment of the invention comprises a link (via the first criteria) to an underlying constant that can be the underlying rate on a first mortgage or similar, the requirements, terms and conditions of which may be set out in a loan agreement between lender and borrower and in some cases a third party manager. The requirements, terms and conditions of any second mortgage instrument or agreement between the borrower and the investor may be contained in a loan agreement or series of agreements outlining the method of operation of the loan administered by the system.

In establishing the system 10 the provider has obtained consent by way of inspection and where required risk rating and legal investigation of said agreements and systems by primary funders and insurers in order for them to sanction the agreement and systems for use and compliance with their policies and procedures.

The embodiment of the invention provides the system 10 for use by the manager or funder of the second mortgage that has inputs controlled by the authorised person to seek or ensure compliance with the terms of the loan agreement pursuant to the operable mortgage.

The onus, mechanism and structure of the system 10 of the embodiment of the invention impacts only on the authorised user of the system, the manager or the funder of the second mortgage (being the provider in the embodiment described) to comply with terms of the loan agreement and any further restriction agreed by the underlying first mortgage lenders. There is little to no systems requirement nor any modification to systems required by first mortgage funders, banks or mortgage insurers to implement and adopt the system 10 of the embodiment of the invention. All that is required is for details of the debt with the first lender and any limitations (as hereinbefore described) to be provided for inclusion in the system 10. i) Create a mechanism allowing the borrower to achieve marked advantages in obtaining and paying Lenders Mortgage Insurance as required by most lenders for equity contributions below 20% of property purchase.

Create a mechanism allowing the borrower to achieve marked savings in

Lenders Mortgage Insurer (LMI) premiums.

In the embodiment of the invention, the borrower will require a lesser loan amount from the first mortgage lender than would otherwise be required under a traditional mortgage arrangement.

Under a traditional mortgage arrangement, an LMI premium is generally payable when the first mortgage facility exceeds 80% of the asset value of the property or 'house & land package' being purchased.

For example, a $400,000 purchase: Using a traditional mortgage structure, a first home buyer borrowing 95% of the purchase price (or $380,000) via the

Bluebay™ non-genuine savings product, would pay $15,017 in Lenders

Mortgage Insurance Premium, at rates current at the priority date of the application.

In the same example, but with 10% ($40k) investment from an investor via a second mortgage facility (Smart Families™ Loan), the borrower would pay only $3508 in LMI premium, as they are only required to borrow 85% of the purchase price (or $340,000) via the first mortgage lender.

In the embodiment of the invention, no Lenders Mortgage Insurance is required on the second mortgage facility (Smart Families™ Loan), resulting in a significant reduction in the LMI premium payable by the borrower.

The risk borne by a provider of the second loan can be mitigated by obtaining a combined return of both interest and growth in a prescribed proportion that may ultimately lead to a further reduction in overall repayments (as most mortgage ' insurance is also capitalised). j) Create a mechanism whereby the potential approval rate for borrowers is significantly increased.

In the embodiment of the invention, the borrower is required to borrow a maximum of 90% of the asset value of the property or 'house & land package' being purchased.

Current lender and lenders mortgage insurance credit scoring mechanisms are heavily influenced by the Loan to Value Ratio being borrowed. For example, a 95% Loan to Value Ratio is deemed to be significantly higher 'risk' than an 85% Loan to Value Ratio.

As a result, a higher (worse) credit score would result from the former. A lower (better) score would result from the latter.

The embodiment of the invention promotes greater investment via the second mortgage facility, reducing the required first mortgage facility, hence reducing the Loan to Value Ratio (first mortgage), and improving the likelihood of approval due to the improved resultant credit score.

[00172] The embodiment of the invention addresses significant public needs by providing a systems framework to simplify bringing together investors and homeowners in a simplistic and more predictable risk/return structure with ease of access to capital, home loan finance and mortgage insurance as well as reducing threshold investments by investors or more importantly "patient investors" to smaller manageable portions that can make a large difference to ownership opportunities for potential home owners and users of the data processing system.

[00173] In can be appreciated that embodiments of the invention provide a system and method for computing a relevant interest and or charge on a mortgage in a specific financial loan, as a function of a lower than usual ongoing annual rate of interest applied to the principal amount of the mortgage, coupled with an investment return component linked to the growth of the land component only of a specific property and payable in whole or in part only on any principal reduction.

[00174] Embodiments of the invention can be applied to corporate or individual investors or financiers who may utilise the flexible system to assist in enhancement of housing affordability for homeowners by lowering minimum repayments required to sustain a financial loan whilst still achieving a commercial return that may be palatable to the investor overall.

[00175] Embodiments of the invention allow an investment in a mortgage to contain critical elements that provide both ongoing and predictable cash flow as well as speculative future cash flow.

[00176] The flexible nature of embodiments of the invention allows it to be applied to supplement traditional mortgages as a source of equity without major system or policy impacts and be adaptable to many investors from individual to corporate entities.

[00177] By combining these aspects the embodiment of the invention encourages participation by a number of parties who can simply invest capital for a commercial return similar to other commercial investments and without hugely complex structures.

[00178] Embodiments of the invention may be desirable to builders and developers to defer some form of equity with a palatable return to enhance ownership options for aspiring home owners. Embodiments may also be an attractive alternative for parents or relatives to assist children into ownership on commercial terms, and potentially Self Managed Superannuation Funds as an investment strategy with some structural adaptation and correct licensing and re-insurance as appropriate.

[00179] An advantage of embodiments of the invention includes the flexibility to be applied to numerous markets such as mums and dads and other "patient investors", to replace non-interest bearing guarantees and co-ownership arrangements that are complex and require significant contributions, management structures and risks.

[00180] An advantage of embodiments of the invention is the ability of a manager or lender to run and administer a loan system in which motivated "patient investor" participants can obtain an arms-length method of accessing investment indirectly in property with yields that are familiar to them with significant risk mitigation, rigour and expertise to ensure investment objectives are realised.

[00181] Embodiments of the invention also establish new markets and participants as a means of applying a second mortgage and raising equity for such, with the ability to allow mortgage insurers using existing products and systems to become involved in retailing the product via funders with a much lower equity component to leverage ownership.

[00182] By providing lower, more affordable, investor contributions, combined with more affordable repayments, the systems of embodiments of the invention provide a solution at least in part to both the deposit gap and the binding repayment constraints of potential home owners but, however, do not support or allow borrowing capacity far beyond the reach of borrowers to prevent the "bidding up" of property prices, retaining ultimate ownership by borrower as a goal.

[00183] Embodiments of the invention are flexible and do not impact on traditional lender mortgage loan systems and require only consent to the second mortgage system to proceed to market with little disruption to funders. The repayments on the second mortgage are stable, and predictable.

[00184] The unique reduction in Investor Return Rate over time in the embodiment described means accumulation of Return on Investment Amounts charged decreases and ultimate ownership to the borrower becomes more affordable potentially than other shared equity or shared appreciation models.

[00185] The system of embodiments of the invention better matches cash flows of young borrowers who's incomes generally rise during their lifecycle due largely to inflationary pressures as well as career advancement, allowing them to repay principal and interest in future periods without interest capitalisation or disproportionate equity shares running away from them.

[00186] The system of embodiments of the invention may be primarily designed as a conduit between capital and market and can also be used as a loan system by lenders and banks that have the appropriate time dependent capital available to meet loan investment objectives for the program.

[00187] By adapting a structure to allow wider access to capital that has long term investment objectives rather than relying on capital markets and others who rely on consistent and period dependent investment objectives the system of embodiments of the invention becomes a major conduit to direct equity into property ownership and motivate affordable housing purchases. [00188] It should be further appreciated by the person skilled in the art that the invention is not limited to the embodiments described.lt will be appreciated by those skilled in the art that variations and modifications to the invention described herein will be apparent without departing from the spirit and scope thereof. The variations and modifications as would be apparent to persons skilled in the art are deemed to fall within the broad scope and ambit of the invention as herein set forth.

Claims

CLAIMS:

1. A system for managing a portfolio of asset acquisitions, each asset acquisition being associated with a respective asset module comprising an asset module controller and asset module storage for storing asset module software for controlling the asset module controller and storing asset module data, the asset module data comprising: details of a value allocated to the asset, the value comprised of one or more asset components; details of a first portion of the value borrowed from a first lender; and details of one or more further portions of the value borrowed from one or more further lenders, a total of the first portion and the one or more further portions equaling the value allocated to the asset so that the asset can be acquired; values of a first set of repayments to be made to the first lender, the first set of repayments being associated with the borrowed first portion; values of one or more further sets of repayments to be made to the one or more further lenders in respect of the one or more further portions, each of the one or more further sets of repayments being associated with a respective one of the one or more further borrowed portions; and values of one or more sets of additional payments to be made to the one or more further lenders, each of the one or more sets of additional payments being associated with a value of at least one of the asset components; the system being operably coupled to communicate with each asset module and comprising:

a system controller; and

wherein the system controller is operable, under control of the system software, to:

receive input data comprising: details of first interest rates associated with respective asset acquisitions of the portfolio and being a percentage of the borrowed first portion; and details of percentage increases in the value of the at least one asset component associated with respective asset acquisitions of the portfolio from an initial value; automatically determine values of the repayments of the first set of repayments for the respective asset acquisitions on the basis of the received first interest rates and communicate the determined values to the respective asset acquisition modules for storage in the asset module storage thereof;

2. A system for managing a loan for acquiring an asset, the system comprising: a controller; i

storage for storing software for controlling the controller, and data;

a display for displaying a user interface; and

input means;

wherein the controller is operable, under control of the software, to:

receive input data via the input means, the input data comprising: details of a loan borrowed from a lender, the loan comprising at least a portion of a total amount required to acquire the asset; details of a first repayment agreement for determining a first amount of a first repayment to be made to the lender; and details of a second repayment agreement for determining a second amount of a second repayment to be made to the lender;

determine a first amount of the first repayment according to the first repayment agreement; determine a second amount of the second repayment according to the second repayment agreement; and

display the first amount and the second amount via the display.

3. The system of claim 2, wherein the controller comprises computer processing

means.

4. The system of claim 2 or 3, wherein the input means comprises at least one sensor operable to facilitate the inputting of data into the system.

5. The system of claim 4, wherein the at least one sensor is operable to sense a touch and/or gesture of a user.

6. The system of claim 4 or 5, wherein the at least one sensor comprises at least one of a keyboard and touchscreen.

7. The system of any one of claims 2 to 6, wherein the input data received comprises data confirming the making of the first repayment and/or the second repayment, and the controller is operable, under control of the software, to determine a loan amount outstanding on the basis thereof, and to display the loan amount outstanding via the display.

8. The system of any one of claims 2 to 7, wherein the first repayment is one of a set of first repayments, and the controller, under control of the software, is operable to determine an amount of each repayment in the set of first repayments according to the first repayment agreement, and to schedule the repayments according to a first payment schedule.

9. The system of claim 8, wherein the second repayment is one of a set of second

repayments, and the. controller, under control of the software, is operable to determine an amount of each repayment in the set of second repayments according to the second repayment agreement, and to schedule the repayments according to a second payment schedule.

10. The system of claim 8 or 9, wherein the first and/or second payment schedule

comprises periodic repayments.

11.The system of any one of claims 2 to 10, wherein the total amount, plus optionally an equity amount, equals a value of the asset.

12. The system of any one of claims 2 to 11 , wherein the asset comprises one or more asset components, and the controller, under control of the software, is operable to determine the value of the asset on the basis of value(s) respectively associated with or of each of the one or more asset components.

13. The system of claim 12, wherein when the asset comprises real estate property, the asset components comprise a value of land on which a house of the real estate property is built and a value of the house.

14. The system of any one of claims 2 to 13, wherein the first repayment agreement is associated or linked with a separate agreement to repay an additional loan for an additional loaned amount, and the controller, under control of the software, is further operable to automatically establish the link.

15. The system of claim 14, wherein the additional loaned amount, plus optionally a

deposit and/or equity amount, comprises a remaining portion of the total amount required to acquire the asset.

16. The system of claim 14 or 15, wherein the separate agreement requires the payment of an interest being a percentage of the additional loaned amount.

17. The system of claim 16, wherein the first repayment agreement requires interest paid to the lender as a percentage of the interest required under the separate agreement, and the controller, under control of the software, is operable to determine the first amount of the first repayment by multiplying the percentage by the percentage of the interest or fee required under the separate agreement by the loan amount outstanding.

18. The system of claim 17, wherein the percentage is equal to 50%.

19. The system of any one of claims 2 to 18, wherein the second repayment agreement comprises a variation in the value associated with a component of the asset from an initial asset component value.

20. The system of claim 19, wherein the variation comprises an increase or a partial entitlement to an increase in the value of the associated asset component from the initial asset component value.

21.The system of claim 19 or 20, wherein when the asset comprises a real estate

property, the variation comprises a percentage increase or other measure of growth in value of land of the real estate property.

22. A system for acquiring an asset, the system comprising: a controller;

storage for storing software for controlling the controller, and data;

a display for displaying a user interface; and

input means;

wherein the controller is operable, under control of the software, to:

23. The system of claim 22, wherein the first lender and/or the one or more further lenders are the same entity.

24. The system of claim 22 or 23, wherein when the asset comprises property, the asset components comprise a value of land on which a house of the property is built and a value of the house.

25. The system of any one of claims 22 to 24, wherein repayments of the first set of repayments comprise a percentage of the borrowed first portion.

26. The system of claim 25, wherein the percentage corresponds to a first interest rate.

27. The system of any one of claims 22 to 26, wherein repayments of the one or more further sets of repayments may comprise a percentage of the one or more further borrowed portions.

28. The system of claim 27, wherein the percentage corresponds to one or more further interest rates, is linked to the interest rate on the first set of repayments, and the controller, under control of the software, is further operable to automatically establish the link.

29. The system of any one of claims 22 to 28, wherein payments of the one or more sets of additional payments comprise a percentage of an increase in the value of the at least one asset component from an initial value.

30. The system of claim 29, wherein payments of the one or more sets of additional payments comprise an investment return calculated as a percentage based on a percentage increase or growth in value of land.

31.The system of claim 1 , wherein the system controller and/or at least one of the asset module controllers comprise computer processing means.

32. The system of claim 1 or 31 , further comprising input means via which the input data is receivable.

33. The system of claim 32, wherein the input means comprises at least one sensor operable to facilitate the inputting of data into the system.

34. The system of claim 33, wherein the at least one sensor is operable to sense a

touch and/or gesture of a user.

35. The system of claim 33 or 34, wherein the at least one sensor comprises at least one of a keyboard and touchscreen.

36. The system of claim 1, or any one of claims 31 to 35, further comprising a display for displaying a user interface operable to display the input data and/or the

automatically determined values.

37. A system for managing a portfolio of asset acquisitions substantially as hereinbefore described with reference to the accompanying drawings.

38. A system for managing a loan for acquiring an asset substantially as hereinbefore described with reference to the accompanying drawings.

39. A system for acquiring an asset substantially as hereinbefore described with

reference to the accompanying drawings.