Heritage Bank has announced it is making its Family Guarantee home loan offering available to investors in addition to owner occupiers, effective immediately.
High property prices have made it increasingly difficult for Australians to enter the property market at all, let alone in the neighbourhood of their choice. As such, a new trend has emerged with people renting in the area they want to live in, and purchasing an investment property in an area they can afford to create a passive income to fund their rent – a pattern dubbed “rentvesting”.
Heritage’s Family Guarantee splits the total amount across two loans, with one secured by the property purchased, and the second partially secured by a family members’ property as guarantors.
The structure enables the borrower to avoid needing to take out Lenders Mortgage Insurance, making the loan more affordable, while limiting the amount for which the family member is responsible.
Over one third of first-time investors indicated they are renting somewhere else, according to the Property Investment Professionals of Australia (PIPA) 2019 annual survey. Data from the Australian Bureau of Statistics (ABS) data confirms the trend, showing around 340,000 Australians are actively rentvesting.
“In recent years we’ve seen saving a deposit for your first home has become increasingly difficult,” said Heritage CEO Peter Lock.
“That has led some people to look at rentvesting, which is a great option for those looking to get into the property market without having to give up the lifestyle they cherish.
“At Heritage, we’re all about helping people achieve their financial goals and we believe our Family Guarantee is a great way for first home buyers to enter the property market.
“We want to be able to help them achieve that goal whether they are owner-occupiers or investors, so we’re proud to now offer our Family Guarantee on investment home loans.”
