While investors can use the equity in their existing homes to build their property portfolio, 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 deposit of $100,000, or 20%, 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 helps you maximise the amount you can borrow so you can purchase the property you want.
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?
Your parents can use their own home’s equity to provide additional security for a portion of your loan amount. This reduces your loan to value ratio and can also save you a significant amount of money by reducing or even avoiding the need to pay Lender’s Mortgage Insurance. So you get into your home or investment property sooner, with help from your family
We can help you with a guarantor loan
Buying your first property doesn’t have to be complicated. We’ll take the hassle out of choosing the right loan and handle your application quickly and efficiently. So buying your first property is what it should be – exciting.
The guarantors will need to complete a special application which we can help them with. Importantly, we can structure 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.
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