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A growing number of potential buyers are seeking out split home loans to enter the property market, a broker has explained.
Managing director and founder of Finch Financial Services, Julian Finch, has observed a surge in the number of people seeking a split home loan – which allows buyers to separate finances while jointly owning a property – in order to enter the property market.
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“Thanks to some clever thinking on the part of financial institutions, they have developed a suite of products to help people get into the property market by sharing the cost of the property and being able to split the loan liabilities and repayments across all the owners,” Mr Finch said.
Speaking to The Adviser, Mr Finch advised other brokers out there who might encounter clients with this type of request that they should “make a point of learning how it works” due to the rising number of potential buyers seeking out this option.
“Add it to your arsenal,” he said.
“It’s not necessarily the best solution for everybody, but given that brokers take pride in the fact that they offer solutions for individual circumstances, this might just be something that gets a deal over the line that in other circumstances might not get approved.”
In an example of how split home loans work, Mr Finch said: “I’ve got one that I’m working on at the moment where a couple [are] buying a property together, a 60/40 split, [with] one person paying cash and the other person requires a loan.
“We only need to have one applicant, essentially. It’s a security guarantor.
“So, we still need to get the ID of the other property owner, but we don’t need to consider any of their income assets or liabilities, which may be a detriment to the other applicant.”
He stated that this will “absolutely” become a trend among borrowers going forward and has observed a “good progression of people being able to buy property together”.
Mr Finch previously noted that home guarantees such as the ones offered by Housing Australia (formerly known as the National Housing and Finance Investment Corporation) have been gaining popularity, especially among friends sharing property.
Housing Australia commenced a new round of home guarantees on 1 July, offering 50,000 places across the First Home, Regional First Home, and Family home guarantees with expanded eligibility criteria.
Brokers have also noted a shift in client behaviour in a high interest rate environment, observing creative choices in spending and an increasingly conservative approach to borrowing.
Amy Small, a broker at Newcastle-based Small Local Brokers, said large purchases such as family vehicles and home renovations have been postponed by many borrowers and predicted a drop in the car loan and personal loan industry in the months ahead.
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