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Heritage Bank has announced that its Family Guarantee home loan, initially offered only to owner-occupiers, will now be available to first home buyer (FHB) investors.
The offering splits the total credit amount across two loans, with one loan secured by the property being purchased, and the second loan partially secured by a family members’ property as guarantors.
According to Heritage, the offering enables the applicant to avoid lenders mortgage insurance (LMI), while also limiting the amount of credit that guarantors are liable for.
Heritage claimed that its offering, which first launched to owner-occupiers in 2016, has been expanded in response to the rise of “rentvesting”.
The bank pointed to data from the Australian Bureau of Statistics (ABS), which found that approximately 340,000 Australians have adopted the rentvesting strategy.
Heritage Bank also cited research from the Property Investment Professionals of Australia (PIPA), which revealed that over a third (34 per cent) of FHBs were rentvesting.
Following the announcement, Heritage CEO Peter Lock commented: “We’ve seen in recent years saving a deposit for your first home has become increasingly difficult.”
“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,” he said.
“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.”
[Related: Bank cuts mortgage rates, scraps maximum loan threshold]
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