A WA-based mortgage manager has introduced a new loan offering that aims to ease the housing affordability burden for first home buyers.
Resolve Finance has introduced the Parent Assist Home Loan, which allows first home buyers (FHBs) to receive a loan for a home deposit of 5 per cent to 20 per cent from parents, with interest-only repayments at half the rate of the home loan.
The offering allows FHBs to repay the principal on the home loan deposit when the property is refinanced or sold.
The loan has been presented as an alternative to loans secured by a guarantor, reducing the risk of asset loss for parents supporting their children’s first property purchase.
Resolve Finance believes that the new loan offering is mutually beneficial, stating that it eases saving pressures experienced by prospective FHBs while also providing parents with a regular income and a portion of an investment gain if the property is sold in the future.
FHBs who borrow 20 per cent of the property from their parents are exempt from lenders mortgage insurance (LMI).
Bankwest’s First Time Buyer Report 2017, released in December, revealed that Australian FHBs are now spending more time saving for a home deposit.
According to the report, on average, FHB couples now spend 4.6 years saving for a 20 per cent house deposit of $111,080 on a median priced home, up from 4.4 years spent saving on a deposit of $103,907 in the previous year.