Heritage Bank opens new home buying avenue to ‘rentvestors’
Ask any first home buyer, and chances are they’ll tell you saving for a 20% deposit is hard work. So much so that for a growing number of young Aussies, ‘rentvesting’ has become the next best thing helping them break into a property market that keeps getting tougher.
The ‘rentvesting’ trend has emerged in the wake of soaring house prices, and involves first home buyers purchasing an investment property as their first home in a more affordable area while continuing to rent where they want to live. According to the Australian Bureau of Statistics (ABS), some 340,000 Australians have already hopped onto this bandwagon.
Home loan lender Heritage Bank also joined the scene today with an expansion of its Family Guarantee loan, previously only available for owner occupiers, to now include property investors.
With the Family Guarantee offer, the total amount borrowed from Heritage Bank is split into two loans - one secured against the property you’re buying and the other partially secured against a family member’s home. This structure is designed to help borrowers with a deposit of less than 20% dodge the cost of Lenders Mortgage Insurance while also limiting the loan amount being guaranteed by their parents (in this way, reducing their risk).
RELATED ARTICLE: Why first home buyers are racing into the property market now
Heritage Bank CEO, Peter Lock said the extended Family Guarantee provides a new avenue for first home buyers looking to enter the property market as investors.
“We’ve seen in recent years saving a deposit for your first home has become increasingly difficult. That has left 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.”
How to access the Family Guarantee offer
Here’s a list of Heritage investment loans that’s now eligible for the extended Family Guarantee:
| Investment loan | Maximum loan-to-value ratio (LVR) | Headline rate (comparison rate*) (p.a.) (investor, interest & principal) |
|---|---|---|
| Discount Variable Rate | 90% | Over $150K: 3.57% (3.59%*) |
| Standard Variable Rate | 80% | Over $20K: 5.24% (5.35%*) |
| Home Advantage Package Variable Rate | 90% | $150K to $250K: 3.72% (4.04%*) $250K to $700K: 3.67% (4.03%*) Over $700K: 3.62% (3.98%*) |
| Home Advantage Package Fixed Rate | 90% | $150K to $250K: 3.19% (3.96%*) $250K to $700K: 3.19% (3.92%*) Over $700K: 3.19% (3.88%*) |
| Fixed Rate | 90% | Over $20K: 3.19% (4.80%*) |
What if I don’t want to be a ‘rentvestor’?
For Aussies who want to live in their first home, there’s another option available if they have less than a 20% deposit saved up: the First Home Loan Deposits Scheme!
Under this scheme, if you’re a first home buyer with at least a 5% deposit, you can now avoid paying Lenders Mortgage Insurance thanks to the Federal Government’s guarantee to the bank for the remaining 15% deposit requirement.
If you’ve missed out on one of the 10,000 spots offered since the scheme’s launch on January 1, the good news is that another 10,000 places will become available from July this year, according to the National Housing Finance and Investment Corporation (NHFIC).
For all the details on how to sign up, jump over to our First Home Loan Deposit Scheme guide.
Eager to lock in a killer home loan before house prices climb even higher? Then head over to our home loans comparison page. Or if you’re looking to be an ‘rentvestor’, then make your first stop our investment property loans comparison page!
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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