Understanding Family Equity Loans
If you are just starting out in life it can be difficult to save a deposit and secure a home loan for a property purchase.
Often, those looking to enter the real estate market for the first time ask their family to help them increase their borrowing capacity and back them up financially.
The benefits of accessing family equity to purchase a home are many. For example, you may be able to buy real estate sooner, avoid paying Lenders Mortgage Insurance and maximise the amount you can borrow.
A potential guarantor is not limited to your parents - step parents, parent-in-law and grandparents and siblings can also be considered.
And your guarantor can determine what portion of the loan they will secure.
The two main types of family equity loans are limited liability guarantors and income guarantors.
The former requires that your family member offers their property as security for your loan - which is usually about 20 per cent, while the latter requires your family member to guarantee your home loan repayments for a period of time.
To get more detailed information on your situation, talk to a Loan Market mortgage broker today.