Granite’s new multi-purpose 40-Year Extended Home Loan could put more properties within reach
The number of 40-year home loans in the Australian market has grown in recent years, with a number of lenders moving to address challenges like housing affordability with one of the levers that they have at their disposal – the length of the home loan term.
For Michael Csavas, chief commercial officer at ColCap Financial (pictured) - who is spearheading the launch of Granite’s new, multi-purpose 40-Year Extended Home Loan through brokers – it is clear this is due to the needs of borrowers in the current market.
“Brokers know the conditions for investors and home buyers across Australia are not necessarily getting any easier; there remains significant affordability, serviceability and cost of living challenges, despite some recent easing in property prices,” said Csavas.
“Forty-year home loans – and we believe Granite’s 40-Year Extended Home Loan in particular – take these challenges head on, by offering an innovative solution that gives borrowers property options to support their home ownership or investment ambitions,” he said.
Buying, building and investing power
Granite’s multi-purpose home loan offers up to 40-year home loan terms for both investors and owner occupiers, for either purchase, refinance, or construction purposes. As well as its purpose versatility, it offers generous LVR limits, up to 95% LVR inclusive of risk fees.
Investors can access up to 10 years’ interest only repayments, while owner occupiers can access up to 5 years. When combined with the potential lower repayments over a longer loan term, it can empower borrowers with flexible control over their cash-flow.
Significantly, Granite’s offering assesses borrower serviceability over a maximum of 35 years, rather than 30 years, helping current income go further. The home loan is also open to PAYG, self-employed borrowers, as well as Company and Trusts (up to an 80% LVR).
“Granite’s 40-year home loan is so compelling because it addresses such a wide range of client lending scenarios, across multiple borrower and income types. For brokers, this means it is a new, meaningful addition to their product toolkit for clients,” said Csavas.
For instance, Granite offers full 40-year home loan terms up to the age of 45 for eligible borrowers, rather than capping the borrower’s maximum age at 40. Borrowers up to 50 can also access the product, though terms reduce incrementally to a minimum 35 year term.
Clients can also actively manage their home loan and repayments over the extended home loan term, benefitting from the availability of features like a 100% offset facility, unlimited extra repayments, redraw and a Visa Debit card as they pay down their loan.
“The 40-Year Extended Home Loan is all about offering extended buying, building and investing power for broker clients. By enhancing borrowing capacity, while maintaining rigorous lending standards, we’re potentially putting more properties within reach,” said Csavas.
A strategic tool extending property horizons
Brokers are expected to play a key role in ensuring clients understand the trade-offs that can come with a 40-year home loan. These can include higher interest costs over the life of the loan term, and well as slower accumulation of equity, particularly in the early years.
However Csavas said it was likely that the barriers that existed for even prime borrowers in the market would encourage an increasing number of clients to consider a 40-year option.
“The 40-Year Extended Home Loan will obviously appeal strongly to first homebuyers or younger owner occupier borrowers, who amidst current challenges with affordability, could use it to buy or build a first a long-term home,” he said.
“There’s also a segment of borrower who would be looking at upgrading - and this could extend their reach within the product age limits - or existing homeowners who might be interested in refinancing for lower repayments to support lifestyle priorities.”
Advantages for investors include the 10-year interest only construction purpose, or being able to access an investment property with a smaller deposit. There are also no age limits for investors, though an exit strategy is required in line with product policy.
“The 40-Year Extended Home Loan can be seen as a strategic product tool for Australian borrowers, with the potential to extend their property reach. It’s opening new horizons at a time when affordability and serviceability remains a challenge in the market.”
"Granite has always taken challenges head on with product innovation. We believe we’ve created a ground-breaking 40-year home loan offering, purpose-built for brokers, that will give borrowers options they didn't have before - what Granite's always been about."
This article was produced in partnership with Granite Home Loans, a part of leading Australian-headquartered non-bank lender ColCap Financial Group.
