As the financial data and statistics are indicating, it is taking longer to save for a deposit for a First Home Buyer or even a second time buyer towards the purchase of a property as cost of living increases. Therefore, Mums, Dads and family members are helping their children get into the property market while they are still young.
Why choose to wait to save a deposit, when lenders offer Guarantor loan products to assist borrowers with no deposit, or limited deposit who have a family member (or Any Relationship) willing to use equity within a property to take advantage of guarantor lenders products such as; Guarantor Support Loans, Family Pledge Loan, Family Guarantee Loan and many more type of loans to fast-track their housing dreams.
The added benefit of a guarantor loan, allows the applicant / borrower to decrease the loan amount for the purchase to 80% LVR (Loan to Value Ratio, LVR), to avoid paying Lenders Mortgage Insurance (LMI), and to maximise the amount they can borrow up to 100% of the purchase price. Some lenders will allow you to borrow the Full Asking Price of the property, plus costs such as Stamp Duty and other Legal Fees and charges via the loan against the guarantors, Mum, Dad, Family members or Any Relationship security or personal guarantee.
Lender’s Mortgage Insurance (LMI) is generally payable on loans that exceed 80% of the value of the property, therefore utilising a guarantee type loan, the guarantor can limit the guarantee to 20% to 25% against the guarantor’s property and the 80% loan is secured against the borrowers new property purchase.
Guarantor loans are the only current 100% loan product available to allow the first home buyer, second home buyers or even investors with no deposit to purchase their first home or additional property. A few lenders do require borrowers to have saved a small deposit.