Yes, guarantor home loans is the only way to borrow between 100% and 110% of the property value. You could borrow 105% of the purchase price if you are a first home buyer.
Please note that if you borrow more than $1 million then you will need to meet additional credit criteria although technically there is no maximum loan size. For a borrower, guarantor loans have the following benefits:
You don’t need a deposit, allowing you to buy a home now.
Please consider the following points before you apply for a guarantor mortgage:
Know the terms and conditions: Some lenders may allow you to limit the guarantee because of their simple terms and conditions for guarantor loans while most of them don’t. That may result in putting the guarantor in a worse position if you are not able to make your repayments.
Getting approval: In recent years, lenders have been getting more conservative, particularly with guarantor loans. It’s prudent of you to know lenders which accept only specific types of guarantees, and which lenders may accept someone in your situation.
The exit strategy: You do not need to keep the guarantee in place for the entire loan term. Rather, you may work out a strategy to remove the guarantee in as little as two years by either making extra repayments or refinancing the loan.
It should be noted that if you do not set up your mortgage in the right way then you may be putting your guarantors at a higher risk. Also, note that you may not be able to remove the guarantee as quickly as you would like. You can learn more about this on our website or by calling our office on 1300 889 743.