No security? No problem! Mortgage Pros is behind hundreds of successful home buyers who have cracked the tough housing market even when starting with a small deposit or no personal assets to write off as loan security.
If you cannot provide loan security for your home loan, you can leverage your family property’s equity to secure the loan and make up for an initial deposit. With our help, you can access waived LMI fees by signing up for a family guarantee home loan.
To supercharge your next loan application, here’s everything you need to know about family guarantee home loans.
Family Guarantee: Everything You Need to Know
A family guarantor is a loan security provided by a family asset (from your parents or siblings) to reduce your home loan’s Loan-to-Value Ratio (LVR).
With a family guarantor, you don’t have to put up a hefty loan deposit and even borrow a higher amount using your family property’s equity. You may even leverage a family guarantee and free your loan from Lenders’ Mortgage Insurance (LMI).
In short, you can use your family’s assets as loan security with a family guaranteed home loan. Doing so gives you access to lower LVRs and skip the LMI fees.
When Can I Use a Family Guarantee?
Using equity from a family guarantee is best for your home loan in the following scenarios:
- When purchasing a high-value property
- You cannot meet the 20% minimum deposit and pay for stamp duty
- If your parents are financially independent or are clear of any loan
Do I Qualify for a Family Guarantee Home Loan?
Most lenders and banks evaluate the following factors to determine whether you qualify for a family guarantee home loan:
- Your financial strength and borrowing capacity
- Your family’s financial strength (whether your parents depend on welfare)
- The family property’s equity
- The bank that holds the property’s outstanding mortgage if your family has any outstanding debt on it
- How will your parents repay the outstanding debt if you default on the loan and your lender claims the guarantee
We recommend a quick self-assessment on those points since each factor largely impacts your application. Speak with our mortgage brokers today, and let’s discuss whether you qualify for a family guarantee home loan and avoid paying LMI fees.
Does My Property Have Enough Equity?
The loan amount you can borrow depends on the equity or value of your family guarantee. Read on if you’re unsure whether your family property has enough equity to qualify for loan security.
Banks will require you to provide a valuation report from an independent party and check how the property fares on its current loan to determine your home loan’s LVR.
Suppose the sum of your parents’ existing loan and the amount from the family guarantee loan falls under 80% property LVR. In that case, the property has enough equity to qualify as a security.
Note that LVR varies between banks and non-bank lenders. Our mortgage brokers at Mortgage Pros will gladly take you through 40+ banks and see which suits your needs—all in one sitting.
Can I Use My Sibling’s Property as Family Guarantee?
Most banks and non-bank lenders accept any family member as a guarantor for your family guarantee home loan. That includes the following:
Speak with us at Mortgage Pros and save yourself from loan shopping and bank hopping stress.
We hate the hassle as much as you do, so we developed a winning formula for reliable loan pre-assessments to determine if your family member can cover as a guarantor to your loan.
How Can I Secure a Family Guarantee Loan?
Not all banks are created equal, and some may have more steps than others to secure a family guarantee home loan. Nevertheless, here are common steps you need to prepare for your next home loan application if you want to qualify for a family guarantee:
- Make sure the property is eligible as a family guarantee. Please chat with us for a quick assessment.
- Check if the property has enough equity to cover a low LVR and skip LMI fees.
- Determine which family member will become your guarantor
- Assess the guarantor’s financial position
- Ensure your family/guarantor is fully aware of the legal implications of using their property as a family guarantee.
Furthermore, many lenders will require your family guarantor to seek financial and legal advice, so they fully understand the obligations and responsibilities of securing your loan as a guarantor.
Have peace of mind for your family guarantee home loan with our mortgage brokers at Mortgage Pros. Our specialists have helped hundreds of borrowers finance their dream homes and skip the LMI fees with a family guarantee. We’re confident we can do the same with you.
Speak with us today, and let’s chat about how we can help you land a family guarantee home loan and turn your dream home into a reality.
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