How does an income guarantee home loan work?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: How does an income guarantee home loan work?

Post by Otto Dargan »

Hi HarleyDude,

Only a few lenders offer income guarantee home loans and the policies around this change on a regular basis. It’s important to speak to a mortgage broker if you’re considering going down this path to ensure you can approved the first time around.

There are two parts to an income guarantee home loan: the first part is the security guarantee - the amount you’re borrowing will be partly secured by your parents’ home.

While 80% of the property value will be secured against the property that you’re buying, the remaining 20% plus the costs of completing the purchase (typically 5% and relating to such costs as stamp duty, legal fees and mortgage transfer fees) will be secured against equity in your parents’ property. You can read more about this on the guarantor loan page.

The second part is the income guarantee from your parents. Basically, your parents’ pledge, in the form of a signed declaration, that they will make mortgage repayments on your behalf should you be unable to do so.

You can borrow up to 105% of the property value which includes the purchase price plus the costs of the completing the purchase including solicitor’s fees, stamp duty and any loan application fees that may apply.

You can also avoid the cost of Lenders Mortgage Insurance (LMI) and even borrow a little more (up to 110%) to consolidate any outstanding debts you may to the lower interest rate that applies to your home loan. It can can be a great way to move faster towards removing the guarantee and, ultimately, financial independence.

If you would like to know more about these then you can check out our website. We have relationships with almost 40 lenders all over Australia and can help you apply for an income guarantee home loan. You can discuss your situation and loan needs with one of our expert mortgage brokers by calling us on 1300 889 743 or enquiring online.

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

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