Family pledge guarantor home loans are now one of the only ways to borrow the full purchase price of a home, true No-deposit mortgages are no longer available, however with the help of a guarantor you can borrow over 100% of the purchase price which will allow you to buy a home and pay for purchasing costs such as conveyancing & registration fees.
There are many differences between the guarantor supported loans offered by the banks & lenders, Ocean Home Loans mortgage brokers are experts in family pledge & guarantor mortgages. Please call us on 07 5593 1420 so we can find the most suitable loan for your particular situation, or enquire online and we will contact you as soon as possible to discuss your options.
How much can I Borrow?
Most lenders will cap the loan amount at 100% of the purchase price for Family Pledge Guarantor Home Loans or will require that you have saved a small deposit.
Some of our lenders are happy to consider lending 105% of the purchase price, which allows you to buy a property and pay for the purchase costs without any savings whatsoever.
Do you qualify for a mortgage to buy a home with no deposit? Please call Ocean Home Loans mortgage brokers on 07 5593 1420 to find out how we can help you, or enquire online and we will contact you as soon as possible to discuss your options.
What are the benefits of Family Pledge Guarantor Home Loans?
All banks consider borrowings of more than 80% of the value of a property to be a higher risk than below 80%, they strongly believe that they will lose money if you fail to make your repayments. Because of this they charge you a fee known as Lenders Mortgage Insurance (LMI), this protects the banks from making a financial loss.
The fee for Lenders Mortgage Insurance (LMI) can be quite substantial, therefore by utilising the benefits of Family Pledge Guarantor Home Loans you can borrow the full purchase price plus costs and not have to pay the Lenders Mortgage Insurance (LMI) fee.
Our mortgage brokers are experts in Family Pledge Guarantor mortgages, so please call us on 07 5593 1420 and we can discuss your options with you, or enquire online and we will contact you as soon as possible to discuss your options.
What types of guarantees are there?
Security guarantee: With this type of guarantee the guarantor uses real estate that they own as additional security for your loan. If the guarantor already has a loan on their property, then in most cases the bank can take a second mortgage as security. This type of guarantee is most often used when first home buyers are buying a home, have an excellent income, but no deposit.
Family guarantee: This is the name given for when the guarantor is directly related to the borrowers. Grandparents, siblings and other family members as guarantors can be considered on a case by case basis.
Limited guarantee: A limited guarantee is where only part of the loan is guaranteed by the guarantor. This is most often used with security guarantors so as to reduce the potential liability secured on the guarantor’s property. Guarantees can be either be limited or unlimited, depending on both the guarantor’s wishes and the lender’s requirements.
You need to talk to an expert
Family pledge guarantor home loans are by nature more complex to negotiate than non-guaranteed mortgages. Using an expert mortgage broker to help structure the correct loan for you is imperative. Lenders have more stringent requirements in place for loan approvals, especially for family pledge guarantor home loans, and an expert mortgage broker will understand which banks will work with guarantor loans.
Similarly, the terms and conditions vary from lender to lender, and not all banks will allow limited guarantees. This puts the guarantor at much higher risk than they may be comfortable with, jeopardizing the entire process. Ocean Home Loans mortgage brokers can assist with guidelines to help get the guarantee removed more quickly, via additional payments to accelerate the loan or by refinancing into a different home loan once sufficient equity has been built up in the property.
Finally, Ocean Home Loans mortgage brokers can advise on the correct insurances to be obtained to limit the risk to your guarantor, increasing the likelihood that the loan will be approved. Please call us on 07 5593 1420 so we can find the most suitable loan for your particular situation, or enquire online and we will contact you as soon as possible to discuss your options.
Can anyone be a guarantor?
Most banks will only allow parental guarantees, i.e. a guarantee from the borrower’s parents. Some lenders can consider guarantees from immediate family members such as siblings, grandparents, spouses, de facto partners or adult children. This is because banks want to make sure that the guarantor has a strong relationship with you.
How much is the guarantee limited to?
In all cases Ocean Home Loans mortgage brokers will look to use only those banks that offer a limited guarantee secured on the guarantor’s property. This means your guarantor is not liable for the entire amount of the loan, only a portion of it. The size of the limited guarantee can be calculated as follows:
Size of the limited guarantee = (Loan amount / 0.8) – value of the property the borrower is buying.
For example if you are buying a property for $250,000 and are borrowing $262,500 to cover your expenses such as conveyancing & registration fees then the calculation would be:
Guarantee Amount = ($262,500/0.8) – $250,000
Guarantee Amount = $328,125 – $250,000 = $78,125
How do lenders work out if your guarantor has enough equity in their property? The total debt secured on the guarantors property, for example their current home loan plus the new limited guarantee, must be less than 80% of the value of their property.
For example, if your guarantor had a home loan with $125,000 owing and they needed to give a limited guarantee of $78,125 then the total debt secured on their property would be $193,750. Their home must be worth $254,000 or more for the guarantor loan to be approved.
Can I get a 100% Construction Loan?
Yes, it is possible to borrow 100% of the land and construction costs if you have a guarantor.
You need to be aware that in most cases you will need to have both the land & construction contracts in place first, most lenders do not allow increases to family pledge guarantor mortgages, so purchasing and settling the land first could mean that when you obtain your fixed price building contract the lender will not be able to advance any further funds.
Our mortgage brokers are experts in Family Pledge Guarantor supported Construction Home Loans, so please call us on 07 5593 1420 if you are thinking of using a guarantor for your construction loan, or enquire online and we will contact you as soon as possible to discuss your options.
When can I remove the guarantee?
The typical buyer will be able to remove the guarantee in 2 to 5 years after purchase, though your experience may be different. Property appreciation and extra repayments will help to dramatically speed up the time required to reduce the mortgage, however below 80% is preferred as this negates the requirement to pay Lender Mortgage Insurance (LMI)
As part our ongoing service to you Ocean Home Loans mortgage brokers will always be available to assist with the necessary documentation to have the guarantee removed.
Get legal and financial advice before becoming a guarantor
Guaranteeing somebody else’s loan is a major commitment, so seeking advice from the appropriate professionals such as your solicitor & or accountant before deciding to proceed is of the utmost importance.
Apply for Family Pledge Guarantor Home Loan with a guarantor’s support
Our mortgage brokers are experts in family pledge guarantor home loans and will help you find the most suitable loan as well as discuss various options with you to protect you & your guarantor.
Please call us on 07 5593 1420 to discuss if this type of loan is appropriate for you and which type of guarantee is required to get your loan approved, or enquire online and we will contact you as soon as possible to discuss your options.
Expect more from Ocean Home Loans…