August 24, 2016
Parents who want to help their children get a foothold in the property market now have a new option.
Heritage Bank launched their new Family Guarantee option on Wednesday.
The new loan option allows parents to use the equity they have in their own home as security to help their children take out a home loan.
“We’re excited about launching this new way for parents to give their kids a helping hand to achieve the dream of owning their own home,” Heritage Bank CEO Peter Lock said.
“It can be tough for young people to get their foot into the door of the property market. Many parents are looking to help them out, but also have to be mindful of their own financial situation.”
Mr Lock said the Family Guarantee option had been structured to make a home loan more accessible for young people, while also limiting the amount of exposure for their parents.
Heritage’s Family Guarantee works by splitting the total amount across two loans – one loan secured by the property being purchased, and the second loan partially secured by the parents’ property as guarantors.
This structure helps the borrowers avoid the need for Lenders Mortgage Insurance, making the loan more affordable, and also helps limit the amount the parents are guarantors for, which helps their peace of mind.
The loan is available to both owner occupiers and investors.
Mr Lock said while the Family Guarantee was a great option to consider, its suitability would depend on individual circumstances.
“We’d encourage anyone who is looking to help out a family member in buying a home to talk to our staff to see if the Family Guarantee is viable for them,” he said.
More information is available from Heritage Bank branches or on Heritage Bank’s website.
