Monster mortgages: How Sydney's trophy home owners pay for their mega-mansions

Getting a loan to buy a property in Sydney is no easy task, particularly if you’re in the small group of elite asking their bank for north of $20 million. But a deep dive into the holdings of Sydney’s richest homeowners reveals having a mortgage is often a strategic decision, rather than a necessity. 

Settlement this week on Australia’s third most expensive house not only reveals the $65.25 million sale price through Ray White Double Bay’s Craig Pontey to hotel developer Dr Jerry Schwartz and his wife Debbie but also the lodging of a mortgage on title that is arguably among Australia’s largest residential home loans.

Records attached to these sales rarely reveal the mortgage amount, but given the purchase price it is potentially in the tens of millions of dollars.

Others choose to bypass the banks – tech billionaire Scott Farquhar didn’t get one when he bought Australia’s most expensive house for $71 million. Leon Kamenev​ didn’t need one to buy his $80 million site amalgamation in Vaucluse and Prime Minister Malcolm Turnbull doesn’t have one on his Point Piper home.

But trophy home owners without a mortgage may be failing to realise the potential of their multimillion-dollar mansions.

“The notion of having debt is not a negative one,” said high-end home valuer Paul Donovan, director of Pontons. “From a financial management point of view the trophy home is a very lazy asset if you have no loans against it.

“Generally, owners are able to borrow at such cheap rates, often about 4 per cent, and reinvest that money in something with a much higher return. It’s a no-brainer in terms of making that equity work.”

And yet, many of Sydney’s finest homes and estates have no mortgage, including the only two houses to sell for more than the Schwartz purchase – the Elaine estate at Point Piper for $71 million in 2016 and the Vaucluse mansion La Mer bought by businessman Chau Chak Wing for $70 million in 2015.

Dr Chau’s daughter Winky Chow also has nothing owing on the $31.8 million Darling Point property she bought this year.

Likewise there is no mortgage on the Altona mansion in Point Piper bought for $61.8 million in 2016 by the rich list Huang family, nor Point Piper’s other record high waterfront residence sold for $60.66 million two years ago by stock trader from China Andy Wenlei Song.

Perhaps unsurprisingly, the family homes behind the Murdoch, Packer and Fairfax publishing dynasties have no mortgages.

Harry Triguboff, ranked Australia’s second richest person and the wealthiest property magnate in this year’s BRW Rich List, has done well on the demand for real estate among Sydneysiders, but the banks aren’t making anything from his 5200 square metre Vaucluse waterfront estate. 

On the other hand, this year’s highest sale result was a highly structured deal to secure the Rose Bay property of retail billionaire Brett Blundy for about $45 million, with vendor financing for buyer Sylvia Myers, wife of high net-worth adviser Lawrence Myers.

Trophy home and art collector John Schaeffer is making the most of his $20.5 million purchase of the historic Tudor-style manor Bonnington in Bellevue Hill last year with mortgages totalling more than $17.78 million on title and with interest rates that start from 12 per cent.

The financial sense behind a mortgage isn’t lost on Aussie Home Loans founder John Symond, who has two mortgages on his Point Piper residence, for which he knocked back an offer of more than $100 million last year.

But despite selling his remaining 20 per cent stake in his mortgage broking empire to the Commonwealth Bank last year, Mr Symond’s residential mortgages are with Westpac.