What are the benefits of guarantor loans?

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JamesCharles2000
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Joined: Wed Apr 24, 2019 2:11 pm

What are the benefits of guarantor loans?

Postby JamesCharles2000 » Wed Apr 24, 2019 2:13 pm

Hello,

I and my wife are looking to purchase our first property around Ravenshoe as soon as we tie the knot this September. We have saved up a decent chunk of money but we will be spending most, if not all of it on our wedding processions.

I have talked to my parents and they have agreed to act as our guarantors for the time being. They have a house that’s worth $800,000 in Tully and the property I am trying to get is currently priced at $750,000.

I wanted to know whether it is possible for me to borrow over 100% of the purchase price? What are the other benefits of guarantor loans?

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Otto Dargan
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Re: What are the benefits of guarantor loans?

Postby Otto Dargan » Wed Apr 24, 2019 2:34 pm

Hi James,

Welcome to the forums.

Guarantor loans have become very popular in recent years as they cost less than standard home loans.

Your guarantor will provide a guarantee for your home loan which is secured on their property. In most cases, this is your parents assisting you to buy a home.

With guarantor loans:
- You don’t need a deposit, allowing you to buy a home right away.
- Save money by not paying a lenders Mortgage Insurance (LMI).
- You can get discounted interest rates from selected lenders.
- You can consolidate some minor debts, such as credit cards, when you buy your home.
- You can limit the size of your guarantee.

Moreover, guarantor home loan is the only loan that allows you to borrow between 100% and 110% of the property value. As a first home buyer, you could borrow 105% of the purchase price of the property.

Our mortgage brokers are experts when it comes to guarantor home loans. Please call us on 1300 889 743 and one of our expert mortgage brokers will help you through the process.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

JamesCharles2000
Posts: 3
Joined: Wed Apr 24, 2019 2:11 pm

Re: What are the benefits of guarantor loans?

Postby JamesCharles2000 » Wed Apr 24, 2019 2:35 pm

Hey,
That’s great! I forgot to mention this before but I want to remove my parents as my guarantors as soon as possible. The thing is that if the wedding didn’t happen, we could still make the repayments on time as we are both high earners. Please let me know how soon we can release them!

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Otto Dargan
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Location: Sydney, Australia
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Re: What are the benefits of guarantor loans?

Postby Otto Dargan » Wed Apr 24, 2019 2:44 pm

Hey James,

In most cases, guarantees are set up because the borrower has no deposit. So removing the guarantee most often depends on how much the property appreciates in value and how much in extra repayments you as a borrower are able to afford.

You can release your parents as your guarantors once the mentioned conditions are met:
- You can afford the repayments without any assistance.
- Your loan is for less than 90% Loan to Value Ratio (LVR) (ideally 80% or less).
- You haven’t missed any payments in the last 6 months.
- Most people are able to remove the guarantee somewhere between 2 and 5 years after they initially set up the loan, although this can vary significantly.

You can still remove the guarantee if you owe more than 80% of the property value but you may have to pay LMI to achieve this.
We are experts when it comes to low deposit home loans at excellent interest rates. Please call us on 1300 889 743 or fill in our free assessment form to see if you qualify for a loan or not.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

JamesCharles2000
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Joined: Wed Apr 24, 2019 2:11 pm

Re: What are the benefits of guarantor loans?

Postby JamesCharles2000 » Wed Apr 24, 2019 2:50 pm

Thanks for letting me know. You mentioned that I can limit the size of my guarantee! What exactly do you mean by this?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: What are the benefits of guarantor loans?

Postby Otto Dargan » Wed Apr 24, 2019 2:51 pm

Hey James,

Guarantor loans are secured by both the property you’re buying and the property owned by the guarantor. Generally, a guarantor loan is structured as 80/20, 80% is the property you’re buying and 20% being the limited guarantee secured on the guarantor’s property. You can use our guarantor loan calculator to find out exactly what the ratio will be here (https://www.homeloanexperts.com.au/mort ... alculator/)

Our mortgage brokers are experts when it comes to guarantor home loans. Please call us on 1300 889 743 or fill in our free online assessment form and we can go through your options.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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