Re: What factors do I need to consider before providing a guarantee?
Posted: Mon Jun 11, 2018 2:02 pm
Hi Medley. Welcome to the forums.
Guarantor home loans are now the only way to borrow between 100% and 110% of the purchase price of a property. It will allow your son and his partner to buy a property now instead of having to save to buy the property. Also they would have to potentially miss out on their dream home and watch as the value of the property increases over time, getting further out of reach.
They could have following benefits:
Acting as a guarantor is a big decision, so it’s recommended that you and your child seek independent financial advice.
Please enquire online or call us on 1300 889 743 and learn about it more.
Cheers,
Guarantor home loans are now the only way to borrow between 100% and 110% of the purchase price of a property. It will allow your son and his partner to buy a property now instead of having to save to buy the property. Also they would have to potentially miss out on their dream home and watch as the value of the property increases over time, getting further out of reach.
They could have following benefits:
- Your child doesn’t need a deposit to buy a home: They’ll usually need 5-10% of the purchase price to buy a home. So for a $600,000 property, they wouldn’t need to save $30,000-$60,000 as a deposit if you were able to act as guarantor.
- Your child can save money by not paying to pay Lenders Mortgage Insurance (LMI): If they were to borrow 95% on a $600,000 property, they would pay as much as$28,591 in LMI (LMI rates vary from lender to lender).
- They could get discounted interest rates as they’re available from some lenders.
- They can consolidate some minor debts, such as credit cards, into the home loan, essentially allowing them to borrow up to 107-110% of the property value.
Acting as a guarantor is a big decision, so it’s recommended that you and your child seek independent financial advice.
Please enquire online or call us on 1300 889 743 and learn about it more.
Cheers,