New Loans to Ease Home Owner Affordability

Two new products coming to the market may have a significant impact on the housing affordability prospects for Australians. As a backdrop Governments have been urged to solve the first home buyer problem after new research found almost half of Australians feel home ownership may be an impossible dream.

A HomeStart Finance survey found 42 per cent of respondents thought it was nearly impossible to own their own home, while 21 per cent felt they would never own their home outright.

The survey by South Australia’s government-backed lender also found the main barriers to home ownership were the rising cost of living, income levels and the difficulty in saving a deposit.

Australians for Affordable Housing spokesperson Jacqui Phillips said young people were facing a “serious affordable housing supply shortage” and “exponentially” rising prices.

Two new products may change all this.

A fund manager plans to enter the mortgage market with an equity release product that will let home owners of any age sell ‘shares’ in their home.

Fund manager DomaCom has revealed it is in the process of gaining regulatory approval for two ‘fractional equity release’ products, which it hopes to launch by the end of the year.

The standard product will allow home owners to sell off a percentage of their property to investors, while a seniors version will be similar to a reverse mortgage.

Mr Gibson said the fractional equity release products would give home owners new funding options.

“It could be anyone from a mum or dad who wants to pay for school fees or an SMSF that is overexposed to property and wants to get some equity out without selling the entire property,” he said.

And in what appears to be an Australian first, credit specialist Fund Manager La Trobe Financial, has launched an innovative combined credit and wealth management product to assist young Australians achieve the worthwhile goal of home ownership.

The new loan recently launched enables children to involve their parents in the child’s property purchase without seeking onerous bank guarantees which place the parent’s assistance and wealth in the misfiring line of banks during a default.

Parents can invest individually, via company or family trust entities and will need to obtain independent legal, taxation and financial advice.

RFS-Finance_2661764_242270_imageJohn Benke from RFS Finance can assist with any property financing queries. You won’t find a more experienced mortgage broker. Call John on 0417 196 970 to discuss these new products.