Can my family help me buy my own home?
A guarantor allows you to purchase a property sooner and potentially save thousands of dollars
By using the equity they've built up in an existing property, a guarantor can help you buy a home or invest in residential property sooner - and the best part is they don't need to actually provide you with any cash.
A guarantor will use their existing equity as security against your loan. One of the most popular reasons purchasers use guarantors is to avoid paying Lenders Mortgage Insurance (LMI) when they have a smaller deposit.
What are the benefits of using a guarantor?
- You may be able to buy a home sooner as you may not need as big of a deposit
- You can buy a larger, more expensive property than you originally planned
- You can avoid paying Lenders Mortgage Insurance (LMI)
- Guarantors can determine what portion of the loan they will secure and can be released from the loan if needed.
Who can be a guarantor?
Guarantors can be parents, parents-in-law or step parents (grandparents and siblings will also be considered). A guarantor must have a minimum level of existing equity in a property they own. The level of equity depends on the lender you choose.
Why you should speak with a mortgage broker
A mortgage broker will be able to give you the proper guidance around how guarantor loans work. If you're considering a guarantor loan, a mortgage broker can let you know which lenders are willing to work with guarantors and will also be able to negotiate between several lenders so that you end up with the most competitive product.