What benefits do a guarantor loan provides?

Any general questions you might have in regards to loans and finance.
ddt
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Joined: Mon Mar 14, 2016 9:17 am

What benefits do a guarantor loan provides?

Postby ddt » Fri Feb 09, 2018 11:47 am

We are planning to get our first home. We have saved around $35,000 but it’ll go towards our marriage ceremony. Luckily, my parents have agreed to give us a guarantee towards our planned property purchase.

Regarding their property, they own a house worth $750,000 in Sunshine Coast. I hope this is sufficient. Can I borrow more than the purchase price with the aid of guarantors? What are the other benefits of having a guarantor?

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Otto Dargan
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Re: What benefits do a guarantor loan provides?

Postby Otto Dargan » Fri Feb 09, 2018 1:15 pm

Hi ddt. Welcome to the forum.

Congratulations on your marriage!

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

In addition, loans with a guarantor have several benefits for you as the borrower:
Moreover, guarantor home loans are the only way nowadays 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 in guarantor home loans. Please call us on 1300 889 743 and we can go through your options with you.

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

ddt
Posts: 7
Joined: Mon Mar 14, 2016 9:17 am

Re: What benefits do a guarantor loan provides?

Postby ddt » Fri Feb 09, 2018 4:04 pm

Thanks, I’ll go with a guarantor loan. Another thing, I want my parents to be removed from the loan at the earliest. We both are high-income earners, so we can make extra repayments in the loan. How soon can I release them?

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Otto Dargan
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Re: What benefits do a guarantor loan provides?

Postby Otto Dargan » Fri Feb 09, 2018 6:10 pm

Hi ddt,

Usually, 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 the borrower can afford to make.

Ultimately, you do not want the guarantee to be in place for the entire term of the 30 year loan. You should apply to the bank to remove the guarantee when the following conditions have been 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.

Please call us on 1300 889 743 or enquire online to speak to a specialist mortgage broker who can assist you to obtain a home loan.

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

ddt
Posts: 7
Joined: Mon Mar 14, 2016 9:17 am

Re: What benefits do a guarantor loan provides?

Postby ddt » Fri Feb 09, 2018 10:17 pm

Thanks for the prompt reply Otto. I’ll contact you guys after my marriage. Cheers.

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Otto Dargan
Mortgage Specialist
Posts: 7243
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: What benefits do a guarantor loan provides?

Postby Otto Dargan » Wed Mar 13, 2019 8:28 pm

Hey Robyn,

Many lenders have Equifax’s score feed directly into their own scorecard that they use to assess loan applications.

Others ignore the Equifax Score and just use the data from your credit file.

Whilst your score with Equifax will not be the only factor that the lender considers, it will make a big difference to the lender’s own credit score and the outcome of your application.

If this may be a problem for you then you can consider:

Using our credit score calculator to identify the problems with your situation.

Reading about lenders that don’t credit score.

Calling us on 1300 889 743 or completing our free assessment form so that one of our mortgage brokers can assist you.

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


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