Brokers now have access to a great new loan option from Heritage Bank for their clients - a Family Guarantee loan that allows people to help their family members enter the property market. Heritage's Family Guarantee works by splitting the total amount across two loans - one loan secured by the property being purchased, and the second loan partially secured by an immediate family members' property as guarantors.
This structure reduces the LVR to 80% and helps the borrowers avoid the need for Lenders Mortgage Insurance (LMI), thus making the loan more affordable. It also helps limit the amount that the immediate family member/s are guarantors for, providing them with some peace of mind.
What are the key features?
- The guarantee will be released once the limited amount of the guarantee is paid in full or (subject to approval) when the standard LVR requirements are achieved. The guarantor or borrower may request a revaluation at any time to confirm the LVR, subject to the payment of the valuation fee.
- Immediate family can use equity in their own property to provide additional security for the loan amount.
- The loan to value ratio is reduced potentially saving the customer a significant amount of money avoiding the need to pay LMI.
- The loan is available to owner occupiers and is not restricted to First Home Buyers.
- First home buyers may be eligible for up to $50,000 cash additional to the borrowings for home improvements if covered by the family members guarantee. This is unique to Heritage.
- A few minor debts may be consolidated if they are less than 5% of the purchase price.
- Standard guarantee and legal fees will apply. This includes land titles registration fees and the cost of obtaining Independent Legal Advice.
What Home Loans are eligible?
- Standard Variable Rate Home Loan
- Building Loan
- Discount Variable Rate Home Loan
- Home Advantage Package Variable Rate or Fixed Rate Home Loan
- Fixed Rate Home Loan
- Refinances can be considered providing there is no increase to the existing loan amounts or guarantor's existing exposure.
If you would like more information, please contact your BDM.
All Heritage Products have these great features
- Interest is calculated daily
- Direct Salary credit to loan
- Available for non-residents
- Transaction accounts which have free transactions
- LMI is applicable when LVR is more than 80%
- LMI can be capitalised - max 95% LVR for Owner Occupied loans and max 90% LVR for Investment loans
- Internet and phone banking are available
- Can switch between all products except into Living Equity and Bridging Loans
- Repayment method – minimum monthly repayment can be paid at any time during the month
- Additional repayments can be made, with no maximum repayment amounts
- Progressive Valuation Fees apply (excludes Living Equity and Bridging Loan) – ask your BDM