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Taking the first step into home ownership is a challenge for most buyers, but your clients could get ahead faster with the help of a new equity release product that enables home buyers to raise a deposit quickly and easily.
One of the biggest challenges facing first time buyers cracking the property market is the daunting obstacle of raising a deposit. With the mean price of residential dwelling in NSW now at $1.177m, a 20 percent deposit is a whopping $235,400. Add stamp duty and other purchasing costs and it’s little wonder that it is harder than ever for prospective buyers to break into home ownership without help.
But an extensive new survey has revealed that two-thirds of parents want to help their children with a deposit for their first home. The research of more than 1000 Australians, conducted for 2Be by the Evolved Group, shows that there is now a real opportunity for first time buyers to achieve home ownership faster with the help of their parents. The good news for brokers and their clients is that a new product, 2Be Equity Advantage, has been created specifically to solve this challenge.
CEO of 2Be Dr Jenny Fagg said opening the ‘’Bank of Mum and Dad’’ can be fraught, particularly if there’s a difference in expectations between parents and their adult children.
“We know many loans from parents to their children are undocumented, which leaves all parties vulnerable in the event of a major life event, particularly a relationship breakdown.’’ Dr Fagg said.
2Be offers free resources for families considering using parents’ home equity to help fund a child’s home deposit, including templates and checklists on its website. These educational tools help customers navigate the sometimes-difficult conversations necessary to help preserve family relationships and assets.
There are a range of innovative products coming onto the market to help parents release the equity in their homes. Unlike the reverse mortgages of old, which gained a negative reputation after some uninformed homeowners found themselves in over their heads, the new options have a guarantee that protects borrowers from owing more than their home is worth.
2Be Equity Advantage is a home equity loan that lets homeowners between the ages of 55 and 75 access up to $500,000 of home equity by assessing a customer’s assets and credit history, rather than their income or job status. The lender’s website also provides a comprehensive new calculator for parents and children to explore borrowing potential and to better understand all aspects of using Equity Advantage to raise a deposit.
While Equity Advantage shares some similarities with traditional reverse mortgages, there are important differences as well. “At 2Be we offer a five-year fixed rate loan with a fixed interest rate, which provides customers with certainty as to the amount they will owe at the end of the term.” Dr Fagg said.
If you are working with a first home buyer or perhaps an existing client that is looking to help a child or grandchild purchase a first property, the 2Be Equity Advantage is a compelling solution. To find out more about the product, the application process and which kind of borrowers it suits call 1300 222 223 or visit the website www.2Be.com.au
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