When using a guarantor for your home loan, you may not need a deposit, if you have a parent or possibly a family member that may be prepared to go guarantor on your home loan, and offer a security guarantee on their existing property to help you buy your home. This is a good option for many, as it may help you get into your home sooner. Lets look at how this works. The guarantor (parent, etc) owns current home with enough equity to support the purchase you are considering.

For example, if your parents have a home worth $400,000, and they have a current mortgage of $150,000, then there may be enough equity to support you, and provide a guarantee to purchase your home. The Bank or lender will look at the purchase price of the property you are thinking of buying, let say for example its cost is $300,000, then the bank or lender will take 20% of the purchase price, in the example this would be $60,000 (20% of the $300,000 property you are thinking about), and secure that debt over the guarantors (your parents) property. The reason why the bank secures 20% over the guarantors property, is that these home loans, cant be mortgage insured (this is when the loan value is greater than 80% of the property price). The home loan is still in your name, but the guarantors are offering a security guarantee, that is, using there property as additional security for the bank, thus allowing you to borrow 100% or more of the purchase price (you can also borrow some fees, if needed to).

Advantages

• No need for a deposit.
• You wont pay a mortgage insurance fee.
• Because the home loan is not mortgage insured, the banks or lenders may have alot more flexibilty in approving your home loan.

Disadvantages

• The guarantor is liable for some of the debt, if you did not meet your commitments. Your Mortgage Broker should try and limit the guarantee portion of the home loan, to the minimum, thus reducing the risk to the guarantors.
• The guarantors borrowing capacity might be reduced, if they want to finance something else.
• The guarantors are taking on a financial obligation, so they should seek, and may be required to seek legal and, or, financial advice, to understand their obligations.
• There may be an application fee.
• There may be a monthly or annual fee.
• There may be a fee to set up the guarantee mortgage.
• There may be costs associated with seeking independent legal or financial advice.
  
  

Guarantor Home Loan Fees

• There may be an application fee.
• There may be a monthly or annual fee.
• There may be a fee to set up the guarantee mortgage.
• There may be costs associated with seeking independent legal or financial advice.

Loan Term And Repayment Types

• The home loan term may range from 5 to 30 years.
• Principle and interest repayments are available
• Interest only repayments may be available.

If you would like some more information about using a guarantor for your home loan, contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.