Do I need to prove my savings to get a guarantor loan?

Any general questions you might have in regards to loans and finance.
Raul
Posts: 3
Joined: Fri Jan 25, 2019 5:12 pm

Do I need to prove my savings to get a guarantor loan?

Postby Raul » Fri Jan 25, 2019 5:14 pm

Hi, I’m a mechanical engineer with Boeing Australia. I have some credit card debt and a car loan that I’m currently paying off. I’ve been meaning to get my own place for some time now. I have a decent income but no real savings. My parents have agreed to be my guarantor. Do I still need to prove my savings to get a guarantor home loan?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7727
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Do I need to prove my savings to get a guarantor loan?

Postby Otto Dargan » Fri Jan 25, 2019 5:38 pm

Hello Raul. Welcome to the forums.

Even though guarantor home loans allow you to borrow 100% of the purchase price, many lenders still require you to have 5% of the purchase price in genuine savings.

This is simply money you have saved yourself with regular deposits into a savings account.

However, there are exceptions such as using paid rent as genuine savings as proof of your capacity to make regular mortgage repayments.

Other lenders do not have a specific policy regarding this. Instead, they use their credit scoring system which will decline your loan based on your asset position relative to your income.

This is an automatic system so you could be declined before speaking to a real human being! Banks are crazy sometimes.

Talk to us to find out which lenders do not require genuine savings for a guarantor home loan by giving us a call on 1300 889 743 or fill in our online assessment form.

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

Raul
Posts: 3
Joined: Fri Jan 25, 2019 5:12 pm

Re: Do I need to prove my savings to get a guarantor loan?

Postby Raul » Fri Jan 25, 2019 6:08 pm

That sounds great. I would also like to consolidate all my personal debt into the home loan. How do I qualify for a 105% guarantor loan?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7727
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Do I need to prove my savings to get a guarantor loan?

Postby Otto Dargan » Fri Jan 25, 2019 7:00 pm

Hi Raul,

A guarantor home loan allows you to consolidate up to 5% of the property value in existing debt that you may have, along with the complete costs to complete the purchase.

Because you can only consolidate up to 5% of the property value, these debts would have to be small such as credit debt or an outstanding personal loan or car loan.

If it is going to put you in a better financial position to consolidate your debts into one monthly repayment at a cheaper home loan rate, then the bank will be more willing to accept this.

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

Raul
Posts: 3
Joined: Fri Jan 25, 2019 5:12 pm

Re: Do I need to prove my savings to get a guarantor loan?

Postby Raul » Mon Jan 28, 2019 6:16 pm

One final question. What are the risks associated with being a guarantor?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7727
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Do I need to prove my savings to get a guarantor loan?

Postby Otto Dargan » Mon Jan 28, 2019 6:37 pm

Hi Raul,

Guarantors are typically mums and dads so it's great that your thinking about the risks involved in using their home as security for your mortgage.

To be clear, guarantors are ultimately liable for your home loan should you default.

However, there is a common misconception that banks move quickly to sell the guarantor’s home in order to recover the remaining debt.

The reality is that banks try everything to solve the problem before taking this drastic decision. The reason is that there is often a significant process and cost involved in trying to sell the guarantor’s home.

Banks will usually opt to reduce your mortgage repayments for a period of time until you're able to get back on your feet.

Should you still not be able to make your home loan repayments, lenders will always take action on your property first before making the guarantor liable for any outstanding debt.

Repossession will only commence if the mortgage has been in arrears for 90-180 days.

For more information please check our risks of being a guarantor web page and speak to one of our mortgage brokers directly by calling 1300 889 743 or by filling in our online assessment form.

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


Return to “Home Loan Forum”

Who is online

Users browsing this forum: Google [Bot] and 2 guests