While home owners can use the equity in their existing homes for a deposit, how do first time buyers get into the property market?
Many first time buyers are earning enough to borrow money but only have a low deposit to enter the property market. On average, a $500,000 property requires a 20% deposit of $100,000 and that could take couples over 5 years to save.
What if you can’t save enough deposit?
A guarantee allows parents to use the equity in their home as security for the new loan. This means the first time buyer can avoid paying Lenders’ Mortgage Insurance (LMI) when purchasing their property.
Technically speaking, a guarantor helps buy the property using the additional security to secure the loan. This minimises the risk to the lender and brings down the loan-to-value-ratio of the loan. Not having to pay LMI can save thousands of dollars.
How does a guarantor loan work?
A guarantor loan can allow you to borrow up to 100% of the property price. While the purchased property acts as primary security for the loan, the guarantor’s property acts as secondary security.
We can help you with a guarantor loan
The guarantors will need to complete a special application which we can help them with. Importantly, we can structure your new loans to allow you to repay the guaranteed loan amount as quickly as possible and then we release your parent’s property from your loan.
Click here to find out how we can help you guarantor loans: What we do