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Guarantor Home Loan

With the help of a guarantor (aka - family pledge) home loan, you can purchase a property with little or no deposit.

Why consider a Guarantor Home loan?

With the help of a guarantor, you can borrow over 100% of the purchase price. This will allow you to buy a home and pay for purchasing costs such as stamp duty and legal costs.

Guarantor loans have several benefits:

You do not need a deposit, allowing you to buy a home now with no LMI (Lender Mortgage Insurance), saving you thousands.

Some lenders may also allow you to consolidate other debts such as credit cards or personal loans, into the home loan.

Loan amount up to 110%

Some lender that allows you to borrow up 110% of the property value. This will cover costs associated with purchasing a property.

How do Guarantor home loan work?

The guarantor will provide the additional security against their property. (Home or investment property). In most cases, this is your parents assisting you to buy your first home or investment property.

Who can be a guarantor?

When it comes to choosing a guarantor, your options may vary depending on the lender's policies. Generally, most lenders typically require parental guarantees.

However, some lenders might also entertain guarantees from immediate family members, such as grandparents or siblings. It's important to note that lenders typically do not accept guarantees from friends, colleagues, or associates.

What If the Guarantor Already Has an Existing Home Loan?**

If your potential guarantor already has an existing home loan, there's no need to worry. They can still offer their property as collateral for your loan, provided they have enough equity. This is typically achieved by establishing a second mortgage on their property.

It's crucial to be aware that the combined debt secured against the guarantor's property must not exceed 80% of the property's current value.

To illustrate, if your guarantor has an existing home loan with an outstanding balance of $150,000 and they need to provide a limited guarantee of $125,000, the total debt secured on their property would amount to $275,000. To maintain a Loan to Value Ratio (LVR) of 80%, their property should be appraised at $345,000 or higher

What if my parents are retired?

In certain cases, lenders may consider guarantees from retired individuals, pensioners, or self-funded retirees over 65, provided they seek legal advice as part of the process.

While lenders may be open to considering retiree guarantors, it's important for both parties involved to proceed with a clear understanding of the arrangement's implications, ensuring that the retiree's financial well-being and home are protected throughout the loan term.

This added layer of caution serves to safeguard the retiree's home, which is often their most valuable asset and a pillar of their financial security in retirement.

When can I release the guarantor?

As your home's value appreciates and you make progress in repaying your loan, you can begin contemplating the release of the guarantor. While the loan may have a term of 30 years, our team can assist you in formulating a strategic plan and structuring your home loan to expedite the release of the guarantor. In some cases, this could be achieved in as little as 2 to 5 years, ensuring your financial independence sooner than you may have anticipated.