Home Loan Advice Centre guides you through the entire home buying journey, without charging you for our service. Click here for our 5 minute online enquiry page . We’ll assess your loan options and send you a full report of your capacity.
The amount you can borrow is affected by your income, your deposit, and bank’s serviceabilty criteria which is linked to interest rates, cost of living, and your existing liabilities etc. See our Borrowing Power calculator for a rough estimate.
Home Loan Advice Centre helps borrowers Australia-wide. We specialise in Sydney and NSW and regularly help clients in remote areas and other states. Feel free to contact us on 02-9210-1000 or 1300-729-177 to see how we can help you.
Family guarantee loans
A family guarantee loan allows family members who own property, to help a borrower by providing additional equity to the lender. These loans are possible where family members have significant equity in existing property, and are willing to allow the borrower to use that equity, to assist with the borrower’s own purchase.
Family Guarantee Loan Benefits
The key benefits for the borrower may include
- Allowing the borrower to maximize the amount you can borrow against a particular purchase price ie up to 110% of the purchase price where the loan can cover the purchase price and all associated purchase costs such as stamp duty and legal fees.
- Allowing the borrower to purchase a property without incurring any mortgage insurance premium often saving thousands of dollars.
- Allowing the borrower to purchase without having to contribute any deposit from their own funds. A borrower still can contribute towards the deposit if they want to however.
- Allowing the consolidation of some personal debts into the home loan.
If your loan structure involves the guarantee of property from other family members to assist your purchase, there are a number of considerations that you, as applicants, and your family members, as guarantors, need to consider.
The terms and conditions associated with guarantor loans varies between lenders however in general a guarantor loan allows family members (the term ‘family member” usually refers to parents, grandparents and siblings) with equity in their own property, to help you bridge the deposit gap and cover up front borrowing expenses, by providing a limited (or in some cases unlimited) guarantee in support of your loan application.
The key benefits for the guarantor are that they can assist you to gain an entry to the property market without you incurring a mortgage insurance premium and possibly allows you to purchase a property at a higher level than otherwise would be achievable. Also this structure allows the guarantor to give this assistance without the need to contribute any cash at the point of purchase ie equity is provided instead.
Guarantors need to be aware however that they are potentially putting their own property at an additional level of risk; and that they may also be required by the lender to seek legal advice to show they are fully aware of these additional risks. Please call Home Loan Advice Centre for additional information on 02-9210-1000.