Refinance A Guarantor Home Loan

Refinancing a guarantor home loan isn’t as straightforward as refinancing a standard mortgage. A lot of borrowers look to refinance so they can remove a guarantor, but that’s not always possible.

Depending on your circumstances, you may still be able to refinance your loan either to remove the guarantor or keep them in place. This guide explains when refinancing a guarantor home loan may be possible, and the key pros and cons to consider.

When Can I Refinance A Guarantor Home Loan?

You might be able to refinance a guarantor mortgage under the following scenarios:

• You bought vacant land with a family guarantee; however, there was no building contract in place and you need to refinance the guarantor home loan after you’ve signed a building contract.
• You do not have ownership of more than one property when applying for guarantor refinance.
• You want to refinance to release equity from your property.
• You can even refinance an investment property if you do not have ownership of any other property.

If the loan to value ratio (LVR) on your existing guarantor home loan is less than 80%, then the better option would be to remove the guarantor.

How Do I Qualify For A Guarantor Refinance?

Lenders will look at how much equity is in the guarantor’s property before the refinance. Complications can arise if the guarantor already has a loan of their property, so the existing lender must consent to another lender to use them as guarantor. Furthermore, before you refinance a guarantor loan, lenders will check that:

• You have a perfect repayment history.
• You have a clear credit history.
• The refinance benefits both guarantor and guarantee.
• If your guarantor does not agree to the refinance, then it is not possible.

Why Should I Refinance A Guarantor Home Loan?

The advantages of refinancing a guarantor home loan are:

• You are getting lower interest rates on your home loan.
• You could get refinance rebates and cash backs.
• You can manage your cash flow better due to reduced interest rates and repayments.
• If you’re releasing equity, then it can be used for renovations, buying another property, etc.

However, there are disadvantages:

• The guarantor could be locked into a longer loan term.
• The guarantor will need to seek legal advice.
• There are costs associated with refinancing a home loan.
• There are risks involved for the guarantor, especially if the borrower defaults on their repayments.

How To Refinance A Guarantor Home Loan

Refinancing a guarantor home loan generally follows the standard refinancing process. This typically involves gathering required documentation such as current home loan statements, building insurance details, income verification (for example, payslips), and other supporting information. It takes around four weeks, depending on the lender and individual circumstances.

Do You Need To Refinance A Guarantor Home Loan?

Refinancing may be appropriate if your financial circumstances have changed or if you are seeking to restructure your loan.

Our expert mortgage brokers are experienced in guarantor home loans and can guide you on available options, including whether refinancing is suitable for your needs.

Call us on 1300 889 743 or fill in our free assessment form.