Receiving a bank loan is becoming an increasingly difficult proposition, especially for those over the age of 55.
Even with over $1 million in equity and assets, people are finding it hard to receive bank loans without proof of significant regular income.
And with most children turning to the bank of Mum and Dad to help them enter the increasingly competitive property market, securing a loan later in life is more important than ever.
That’s where Equity Advantage by 2Be is paving the way for a new kind of loan.
“We’ve created a loan which allows people 55 or over,” Michael Sirmai of 2Be exclusively explained to Ticker Insight. “Who built a substantial amount of equity in their home to get … up to $500,000 for five years at a fixed rate of interest.”
“Most banks have quite specific and limited lending criteria. So typically, they will only look at income and job status.
“Whereas, we’re flipping it.
“And we’re actually, for people who have built a substantial amount of equity in their homes.
“We’re looking at their asset position and credit history. And so that’s really allowing us to unlock lending opportunities for a whole bunch of people who are currently being ignored.”
Another problem with providing a loan for children, is many people don’t understand the long-term implications.
2Be wants to combat this scenario by providing detailed information to those wanting to open the bank of Mum and Dad.
“The key risks are not thinking through whether to gift or loan the money,” Sirmai continues. “Not properly thinking through what are the implications if things go wrong, particularly with the kids that you’re giving to like marital separation, those sorts of things.
“And probably the third most important thing is they’re not actually then documenting what they’ve agreed.
“And so what we’ve done, in addition to building a product is providing a whole bunch of tips and tools and templates on our website, to allow … families, parents and kids to get up to speed.”
For those interested in a loan, 2Be has set up a simple online application process.
“But before that, you can actually look at our calculator and see how much equity you might be able to release from your home,” Sirmai adds.
For more information, or to apply for a loan head to 2be.com.au.