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Springboard clearly LVR move: Matthews

Westpac’s new "Family Springboard" is promoted as being a tool to help first homebuyers, but others look at it as a way around impending new restrictions on low equity mortgages.

Wednesday, July 31st 2013, 2:15PM 1 Comment

by Susan Edmunds

Under Springboard a borrower can make up the deposit on their home loan by using equity on family members' properties.

Borrowers would end up with two loans – one for the bulk of the mortgage and the other held jointly with a family member.

The person providing the equity as security for the second loan would have no liability for the rest of the mortgage.

Westpac head of retail distribution Ian Blair says the product gets around an often-frought issue of parent’s or a family member guaranteeing a loan.

The key point here, he says, is that the parent’s, or whoever is contributing to the loan, are only responsible for ensuring the Springboard Home Loan is repaid.

“They have no liability attached to the rest of the home loan.”

He also says the borrower can avoid paying a low equity premium on a loan which would apply if the deposit was less than 20% of the loan.

However some commentators see it as a way of circumventing the proposed restrictions on low equity loans.

Claire Matthews of Massey University’s Centre for Banking Studies said it was just relabelling systems that the banks already offered. Most banks allowed a customer to use a guarantor on a loan if they did not have sufficient deposit.

“Whatever rule they put in place, people are going to find a way around it. [This is] quite clearly going to enable somebody to buy a house with a lower level of deposit than the LVR rules are trying to require.”

Kirk Hope, Head of the Bankers Association, said he would not be surprised to see other organisations develop products that met the needs of specific sectors of the population.

How it works

  • Both sets of borrowers must provide information about their income and any current debts, and meet the standard home loan lending criteria.
  • The deposit plus the Springboard Home Loan must add up to at least 20% of the value of your new home
  • Both sets of borrowers must be able to repay both the home loan as well as the Springboard Home Loan
  • The property must be owner-occupied.
« Consider other tools to cool market: CommentatorsTwo banks join RealMe; another thinks about it »

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Comments from our readers

On 2 July 2014 at 8:32 am Mike said:
So, is the family member reonsible for both loans? Ian Blair says not, ypu say they do. Which is correct?

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 ▼7.74 ▼7.35 ▼6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 12 June 2024 4:04pm

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