family home guarantee loan

Family Home Guarantee

What is a Guarantor Home Loan?

Saving for a 20% deposit can be hard today, on a property price of $750,000 a 20% deposit is $150,000 which could take years to accumulate.

A guarantor home loan is a unique financing arrangement in which a family member of the homebuyer pledges their own property as collateral for the loan. This type of loan serves as the sole option for borrowing between 100% and 110% of a property's purchase price. Essentially, 80% of the loan amount is secured by the property you intend to purchase, while the remaining 20% is secured against your parent's property.

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How Much Can You Borrow?

  1. The amount you can borrow through a guarantor loan depends on your specific borrower category:

  2. First-home buyers: Up to 105% of the property's value.

  3. Construction projects: Up to 105% of the combined value of the land and construction costs.

  4. Refinancing: Up to 100% of the property's value.

  5. Home purchase: Up to 110% of the property's value.

  6. Investors: Up to 105% of the value of your investment property.

What Are the Advantages of a Guarantor Loan?

Opting for a guarantor loan offers several advantages:

  1. No deposit is required, enabling you to become a homeowner sooner.

  2. You can avoid the expense of paying a Lender's Mortgage Insurance (LMI) premium.

  3. Some lenders offer discounted interest rates for guarantor loans.

  4. It's possible to limit the size of the guarantee to minimize your family member's exposure to risk.

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