When you don’t have enough of a deposit and still need to get a loan to get into your first or next property, then consider a Family Guarantee Loan.
Also know as family pledge facilities, these loans are an innovative option to get into your first home or your next home for that matter.
These work by using the existing equity in a family members home, typically Mum and Dad’s place, and leveraging it with your purchase. Both properties are used as security for your home loan.
The advantage of this is that you minimise your need for a deposit (equity allowing) and you avoid paying any sort of mortgage insurance.
These loans are completely different to parents borrowing the deposit and handing them over as gifts.
Another advantage is that you can still utilise any first home buyer concessions or stamp duty rebates and have them come into your pocket as surplus cash.
The disadvantage is that it the Mum & Dad’s/ family’s home will be encumbered by the portion of debt over 80% of the your new place bought.
Nonetheless it is a very good option for first home buyers as it provides for massive savings when compared to having to buy Lenders Mortgage Insurance (which could be up to 3.5% of the loan amount).
This option works well even if the family members still have a mortgage on their property as some lenders will take a second mortgage behind the current lender to assist.
Our highly experienced team will assess all options without the presumption of parents putting up their home, so that you have all the cards on the table and you can make a decision as a family.
If your parent’s won’t trust you, well….
Seriously though, Family Guarantee Loans are a very good way of getting into your first home.
Contact us to get all you options.