How will having a guarantor help your loan application?
If you don’t’ have enough deposit, but do have the ability to make required home loan repayments, a guarantor could help you to secure additional funds to buy a home.
Who can be a guarantor?
A guarantor is a third party to a home loan, helping you to get a loan by offering additional security support. Guarantors are generally limited to immediate family members. This would be a parent but guarantors could can including siblings and grandparents. Some lenders would allow extended members and even ex-spouses.
How much can you borrow for a guarantor home loan?
Guarantor Home Loans are now the only way to borrow between 100% and 110% of the purchase price of a property.
- First home buyer: 105% of the property value
- Construction: 105% of the total land value and cost of the construction
- Refinancing: 100% of the property value
- Debt consolidation and purchase: 110% of the property value
- Investors: 105% of the value of your investment property.
How does guarantor loan work?
A guarantor allows the equity in his/her own property to be used as additional security for your loan. The primary security for the loan will be your property, but lenders would also take a mortgage over your guarantor’s property.
What are the benefits of guarantor loan?
No deposit home loan is not in the current market, which makes guarantor loans the only way to borrow 100% or more of the purchase price. The benefits are
- You do not need a deposit to buy a home.
- LMI premium is not required.
- Discounted interest rates are available from some lenders.
What are the risks of being a guarantor?
If you are unable to pay back the loan according to the terms of your contract. The lender can take legal action against you and in some circumstance, your guarantor. A guarantor is ultimately liable for the amount specified for your home loan should you default on paper.
Guarantor home loan could another way to help a first home buyer with many government initiatives this year to purchase your first home. Get in touch to learn more on 1300 880 123.