Guarantor Home Loans:
Guarantor home loans are an excellent strategy to assist new entrants to the property market to secure the lowest possible finance solutions by leveraging off the existing equity in their parent’s property assets.
The savings can be significant, with generally a more competitive interest rate on offer in conjunction with mortgage insurance premium savings which can normally costs tens of thousands of dollars.
How much can I borrow?
- Borrow up to 105% of the property value with your parent’s investment property (property must be in Australia)
- Borrow up to 100% of the property value with your parent’s home (property must be in Australia)
Will I get approved?
- Lenders are more inclined to approve a guarantor home loan as it is a lower risk solution
- We always suggest having clear evidence of accrued savings (or showing 6 months paid-on-time rental history)
- You need a clear credit file
- You need to have stable employment and a regular income.
- Only your parent’s can provide the guarantee, no other family or friends can provide their property as a guarantee
- You will not be allowed to borrow more with a guarantor (servicing guarantee) only a security guarantee (to avoid a larger deposit requirement)
Interest rates from:
2.18% | 2.38%* p.a (Comparison Rate)
We have all Major, Tier 2 & Specialist lenders who specialise in guarantor home loans.
Discover if you qualify:
We can help you buy a property with a guarantor anywhere in Australia
Why are Guarantor Home Loans deemed to be lower risk?
Guarantor Home Loans are looked at favourably compared to a standard application (with or without a large deposit).
The reason for this is that having a guarantor in place gives the bank alot more security and less exposure in the event that you cannot repay your home loan. Not only are the bank taking a safety net of a second property as security for the loan but this property is also owned by other parties (who generally will be in a stronger financial position that the borrowers) which gives the bank alot more comfort that the loan will be repaid.
What are the benefits of a Guarantor Home Loan?
Lower interest rates
- We can secure lower interest rates due to the lower risk by providing the guarantee
- You’ll generally have more lender options as Lender’s Mortgage Insurance is avoided
This is the best way to buy a property with no deposit!
Avoid Lender’s Mortgage Insurance (LMI)
- Although you could be borrowing up to 105% of the new property price, you’ll completely avoid LMI
- This will provide significant premium savings (depending on purchase price, this could be in the tens of thousands)
- You’ll also have an easier application with less paperwork requirements
Borrow for stamp duty and other costs
- You’ll have the benefit of potentially being able to borrow for the purchase costs
- This will avoid you needing to save for stamp duty and legal fees
- You can then place all savings into an offset facility or to be utilised is cosmetically renovating the property (to increase value quickly)
Genuine savings not a mandatory requirement
- Under a standard application, you’ll need to verify genuine savings if you are borrowing above 85% of the purchase price
- Genuine savings is classified as 5% of the purchase price, saved up over atleast 3 months. If you can’t meet this criteria the banks won’t approve your loan
- You can completely avoid this requirement with a Guarantor Home Loan
How does it work?
- We’ll discuss your situation with you in detail
- We’ll get a free initial assessment completed on your borrowing capacity & finance eligibility
- We’ll confirm if your situation is eligible for a Guarantor Home Loan
Discussion with Guarantors
- We’ll conduct a detailed interview with the guarantors to confirm their overall eligibility
- We’ll discuss their income and asset position to ensure they are comfortable providing the guarantee
- We will then collect all details from them once in agreeance to move forward with your application
Lender solution confirmed & approved
- We’ll work with you (and your parents) to collect the paperwork required to lodge your application
- We’ll keep all parties updated with the approval status
- Once approved, we’ll assist all parties in executing loan and guarantor documents in preparation for settlement
- We’ll assist your parent’s in arranging the property title to be securely handed to the chosen lender for settlement
What if this option doesn't work for my circumstances?
If this option isn’t suitable or your parent’s aren’t in a position to provide a guarantee then that is also completely normal and fine. At no stage should anyone be pressured into providing a guarantee when they are not comfortable in doing so and not completely aware of the risks involved.
You can still be eligible to proceed with a home loan application without a guarantor, you will just need to then meet the following criteria instead:
- Your parent’s or a family member could provide a deposit in the form of a non refundable gift
- Secure a minimum 5% deposit in savings
Applying for a Guarantor Home Loan.
If you need advice on your refinance options, please speak to us!
We’ll give you a thorough overview of your position and the most competitive options available to you in the market.
Complete a Free Assessment Form to get started with our team today.