Guarantor Home Loans – What you need to know!
September 1, 2017
With more and more first home buyers recognizing the value in the Perth market and deciding now is a good time to purchase, it is an opportune time to discuss a guarantor home loan.
Many first home buyers would purchase their first home, but a very large number cannot as they do not have a sufficient deposit.
Whilst Better Choice Mortgage Services has access to lenders that will almost lend 100% of the purchase price of the property, a small deposit is still required and the associated buying costs can run into the many thousands.
If the homebuyer does not have the required deposit, then instead of waiting to save the deposit and run the risk of the market “getting away from them”, the 1st home buyer may seek a guarantee from a family member.
Generally, a guarantee would be provided by a close family member, e.g. parents, grandparents or sibling. If any of these family members have a substantial amount of equity within a property, they may be prepared to allow the 1st homebuyer’s bank to take a mortgage over their property to help secure the 1st home buyer’s loan.
That is, the bank will take a mortgage over the property the 1st home buyer purchases, as well as a mortgage over the guarantor’s property. The guarantor (the family member) will provide the bank a limited guarantee. That is, the guarantee provided by the Guarantor is generally limited to 20% of the purchase price of the 1st homebuyer’s property.
A sobering word of caution, Better Choice Mortgage Services strongly recommends the Guarantor seek independent legal and financial advice. The bank will probably insist on a least independent legal advice
Interesting articles: How much does it cost to use a broker?
Tags: 1st Home, Can a Family Member Be a Guarantor?, Do I Need a Deposit If I Have a Guarantor, Guarantor Home Loans, Perth Mortgage Brokers, What Is a Guaranto
Better Choice Mortgage Services is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within this website. While the information contained within this website is periodically updated, no guarantee is given that the information provided in this website is correct, complete, and up-to-date. Although the Better Choice Mortgage Services website may include links providing direct access to other internet resources, including websites, Better Choice Mortgage Services is not responsible for the accuracy or content of information contained in these websites. Links from Better Choice Mortgage Services to third-party sites do not constitute an endorsement by Better Choice Mortgage Services of the parties or their products and services. The appearance on the website of advertisements and product or service information does not constitute an endorsement by Better Choice Mortgage Services, and Better Choice Mortgage Services has not investigated the claims made by any advertiser. Product information is based solely on material received from suppliers. Advanced Finance (Pty) Ltd t/a Better Choice Mortgage Services are not financial planners or accountants and we would encourage our clients to seek professional advice before acting on any a financial or taxation information in this news post.
