Have You Heard Of A Guarantor Home Loan?

Reception • Oct 06, 2022

A guarantor loan may be for you if you have family members willing to use their property equity to help you secure a loan. 


We know that getting that deposit together can be hard; this is a great option if you don’t quite have the deposit but know you can service the loan repayments.




A guarantor loan means that a lender is willing to take a portion of the family members (‘guarantors’) property as security to secure a part of the purchase. 




They do this by using the equity in the guarantors’ property therefore; a valuation will always be conducted to assess that sufficient equity is available. 


*Please note only certain lenders will accept these types of applications.



Understanding the responsibilities of a guarantor



There are responsibilities that a guarantor must consider before agreeing to this. 


The main responsibility of a guarantor is that they will be completely responsible for repaying the debt obtained by the borrower (purchaser) if and only if the borrower cannot meet their repayments under the loan.


The lender will always ensure that guarantors meet lender policy criteria and are deemed, acceptable guarantors.


In making this decision, they will consider factors such as the valuable asset to liability ratio, income and ability to repay the loan if the borrower cannot, exit strategies, etc.


Most lenders also request that guarantors obtain independent financial and legal advice when signing legally binding loan Contracts.


The loan will always be in the name of the borrower, not the guarantor. The borrowers are directly responsible for the loan however the guarantor must be able to repay if the borrowers do not.


Key benefits of using a guarantor



The main benefit of using a security guarantor is that the borrower will not incur charges for Lender’s Mortgage Insurance.  

This often amounts to a saving of thousands of dollars.



Provided there is a steady increase in the market and the purchasers maintain their loan repayments & property in good order, a new valuation can be ordered 2-3 years following the purchase to re-assess the transaction structure. 



In a few short years, there may be sufficient equity and loan balance reduction in the property to release the guarantors and discharge them from the guarantee.


In summary 


As you can see, having a guarantor can be a great benefit to a first home buyer, be aware that only some lenders will allow this type of loan, so be sure to speak with us to find out your options! 



We have a range of blogs here that you can refer to for more value-packed information.



Remember, we are here to help you; please call us at (03) 8657 8664 if you have any questions or would like to make an appointment to see us!



New Paragraph

The Power of Pre-Approval: Your Key to Home Buying Success

05 Oct, 2023
The Power of Pre-Approval: Your Key to Home Buying Success

Navigating the World of Mortgages: What borrowing capability do you have?

01 Aug, 2023
Navigating the World of Mortgages: What borrowing capability do you have? Deciding to buy a house is an exciting milestone, and we're here to accompany you through the intricate world of mortgages. With the changes to interest rates that have happened over the last twelve months, it's essential that we are prepared and approach borrowing with a healthy attitude, as your choices now will have long-lasting implications, so let's ensure you're well-prepared for this homeowner journey. What should I consider when considering my borrowing limits? First, let's figure out how much you can borrow without sacrificing your peace of mind and daily joys. The key here is to measure your income against your expenses, including the potential mortgage repayments. A general rule of thumb: try to keep your mortgage repayments to no more than 35% of your gross monthly income. When it comes to borrowing generally, the higher your deposit and the higher your income, the more they should be willing to lend. The good news is we have more flexibility as mortgage brokers than the big banks, so we can look at your circumstances closer. Now, let's discuss some essential factors to consider when figuring out your borrowing limits. How much debt can you handle? Think about your lifestyle and what you're willing to give up versus what's non-negotiable. Be realistic about your dream home. Start with something affordable and gradually work your way up as your earnings grow and your equity increases. Think about the future. Are you planning to start a family, change jobs, or experience significant life changes? Factor those possibilities into your calculations. Keep an eye on interest rates and consider how further rises might affect your ability to make repayments. Reminder; A reminder that when purchasing a property, you will also need to factor in further expenses, such as, pay stamp duty, pest & building inspections, conveyancer fees, application fees, council rates, possible strata or body corporate costs, and utility bills to factor in. In Summary We'll help you evaluate your financial situation, research and compare over thirty lenders and loan options, and gather the necessary documentation to help you whether you are purchasing your first home or refinancing. What should I do next? Our dedicated team is committed to nurturing your financial well-being and helping you achieve a stronger and more secure future. Call our office on (03) 8657 8664 to organise a time to chat, and we also invite you to take advantage of our free resources by heading to our website. https://www.futurefinancegroup.com.au/

Refinancing: What Are Your Options As A Homeowner?

By Bree Jones • 19 Jun, 2023
At Future Finance Group, we understand that financial hardship has become a pressing concern for many homeowners across the country, including Melbourne. We want to help you explore the benefits of refinancing your mortgage. By assessing the right time to refinance and understanding the steps involved, we can guide you to potentially save money, access improved loan terms, and secure a more favourable financial future. What are the Benefits of Refinancing? During these challenging times, refinancing your mortgage can bring meaningful advantages. Firstly, it may allow you to take advantage of lower interest rates, reducing your monthly mortgage payments and offering much-needed relief. Additionally, refinancing allows switching from a variable-rate to a fixed-rate mortgage, ensuring stability and protection against future rate increases. By consolidating high-interest debts, you can streamline your finances and gain more control over your monthly obligations. Also, refinancing can unlock equity in your home, providing funds for essential expenses or other financial goals. Assessing the Right Time to Refinance Working out when to refinance can be challenging, mainly because we do not know what the future will bring. We are here to look at your personalised options and work with you to ensure your financial security. We can consider many factors, such as your credit score, home equity, and employment stability, to give you informed options. Steps Involved in Refinancing and Potential Cost Savings : We are here from the beginning to the end and strive to simplify the refinancing process for you. We'll help you evaluate your financial situation, research and compare over thirty lenders and loan options, and gather the necessary documentation. Our ultimate goal is to help you secure better terms, rates, and long-term cost savings to ease the pressure on you and your family. In Summary In these challenging times, exploring refinancing options can provide much-needed relief and open up financial opportunities for you as a homeowner. What should I do next? Our dedicated team is committed to nurturing your financial well-being and helping you achieve a stronger and more secure future. Call our office on (03) 8657 8664 to organise a time to chat, and we also invite you to take advantage of our free resources by heading to our website. https://www.futurefinancegroup.com.au/
MORE POST
Share by: