Posted on Jul 9, 2018

Wilson Finance Solutions

Guarantor Loans As many of us have experienced, saving a deposit is both time consuming and frustrating! Saving a 20% deposit can be so difficult in a housing market where prices are consistently rising. Chances are you are paying rent at the same time, making it doubly difficult. Thought of a Guarantor? When borrowing more than 80% of the property value you will also be slugged with a Lenders Mortgage Insurance (LMI) Premium. It never ends! Guarantor Loans can provide a fantastic solution, getting you in to your own home quicker, and more cost effectively than paying LMI. What is a Guarantor loan? Your guarantor (normally an immediate family member) guarantees your home loan by offering their property as an additional security. That is, the bank holds both your property and your parent’s property as security. Most commonly, parental guarantees assist in buying first homes. Say you wanted to purchase a property for $500k, but only had $25k cash savings, your parents could guarantee an additional $75k plus costs against their property to reduce your lending value to 80% of the purchase price. What are the benefits? Low or No deposit required. The Loan to Value Ratio (LVR) is kept at 80%, meaning no LMI is payable. You’ll avail yourself to more lender choices and more attractive rates You will be paying your own mortgage, not paying rent to reduce someone else’s. When can I remove the guarantee? You can request that your Guarantor & their security