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ISCOVER
Rising rates have made breaking into the property market harder, but as some brokers have discovered, a remarkably simple solution can help first time buyers achieve their home ownership dream faster.
The Reserve Bank’s tightening of monetary policy to curb inflation has seen the cash rate surge from 0.1% in April to 2.60% in October this year. This is the first upward cycle Australia has seen since November 2010 – with more hikes tipped to follow. As expected banks and lenders have responded with most passing on the 2.5% increase and some going even higher.
Those hardest hit are first time buyers who are trying to take advantage of a cooling housing market but are struggling to meet mounting lender serviceability requirements. Latest data from the ABS shows that the number of first home buyers in the market while slightly up in August from July, has seen an overall decrease from 16,330 in January last year to just 9,258 in August this year.– the lowest level seen since before the pandemic.
With many analysts predicting further falls in property values of up to 20%, this presents first home buyers with a frustrating challenge - it’s a great time for them to buy but raising a sufficient deposit to meet bank’s serviceability requirements or to avoid LMI costs makes funding almost impossible.
That’s why brokers are now turning to a solution for their clients that empowers parents to provide financial support through unlocking some of the equity in their own home.
The innovative new 2Be Equity Advantage loan for over 55s allows parents to easily access the capital built up in their home to gift or loan their children funds to top up their own deposit. This timely new product was created to “use the Bank of Mum and Dad to help kids buy their first home or investment property and build the whole family’s balance sheet”, CEO of 2Be Dr Jenny Fagg said.
What also makes 2Be Equity Advantage unique is that it considers a borrower’s assets and credit history and not their income or job status – which makes it a fast and easy way for parents to access cash to help their children now.
Equity Advantage at a glance:
- 5-year fixed term loan of up to $500k
- Fixed or variable rate options
- Option to pay interest or defer all payments to the end
- Easy online application – less than 30 minutes
- Approvals in as little as 48 hours
Equity Advantage is not for everyone - eligible borrowers must be between the ages of 55 and 75, own a home with a minimum value of around $750k to $1m, have at least $500k in other net assets and a clean credit history.
The 2Be website has free calculators for both parents and kids that show how much equity can be unlocked and how this can benefit both the parents and children over time - as well as great educational materials to ensure that the Bank of Mum and Dad is set up for success.
If you are working with a first home buyer or perhaps an existing client that is looking to help a child purchase a first property, the 2Be Equity Advantage could be the answer. 2Be also offers a referral program for mortgage brokers and advisers.
If you’re interested in in finding out more about 2Be Equity Advantage or to become a referrer, call 1300 222 223 or visit the website www.2Be.com.au
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