family guarantee loans from:

Family guarantees are helping more people into their first property

How does a Family Guarantee loan actually work?

A family guarantee can fast track a parent's child into the property market by using the equity in the parent's home (or making an equivalent cash deposit with the Lender as security) to lower the LVR - Loan to value ratio.



This means you can get started with a much smaller deposit and still avoid expensive LMI fees, and potentially access lower interest rates.

Family Guarantee - benefits for the borrower

Why do people ask Mum & Dad for this type of help? What are the key benefits compared to going it alone?

Why would a parent consider being a Guarantor?

It's not all one-way traffic. A Family Loan can offer real benefits to the parents. 

The bank of 'mum & dad" - australia's most popular bank

  

How does it work?

The guarantor uses equity from their home (or even savings) to guarantee part of their child’s loan. The key benefits for the borrower, are that it can help them enter the property market earlier and with less fees.


  • By removing the need for a substantial deposit to be saved, the applicant can purchase a property often years earlier.
  • Only the applicant makes regular loan repayments (The guarantor is only called on if the applicant breaches the loan contract.)
  • The Guarantee helps the applicant achieve a better LVR - often resulting in reduced or no Lenders Mortgage Insurance



An example of how it makes a difference


Amanda's Story

Amanda is planning to purchase a $600,000 unit with a $30,000 deposit (LVR of 95%).  Mortgage Insurance (LMI) would be payable due to the high LVR . Provided they have equity in their home, Amanda's parents could provide a Parental Guarantee of $90,000 as additional security on the loan, reducing her LVR to 80%. 


In this example, it could mean Amanda can avoid paying Lenders Mortgage Insurance, saving her up to $25,707.


With many lenders, lower LVR's can also result in lower interest rates.   

Family Guarantee without using your parents house

  

Rick's Story

Rick's parents wanted to help him get into the property market as prices seemed to be going up faster than his deposit. Only problem was, they refused to  put their home up as security.


Rick's parents had $80,000 in savings that they did not require access to, so they deposited it as a term deposit (earning a competitive interest rate) with the Lender providing the loan to their son. This cash deposit was not used as a part of the loan - it was merely acting as the security. 



If things somehow went "pear shaped" the only liability the parents had, was the the cash deposit - not their house.



First Home Buyer (FHB) Resources

FHB (new home) Grants

Access information on how the NSW 'new home' First Home Buyer Grants operate. Updated rules apply July 1st 2017

FHB Stamp Duty Concessions

Visit the NSW Government site explaing all the details on the First Home Buyer Stamp Duty concessions

FHB Stamp Duty Calculator

In NSW Stamp Duty for eligible First Home Buyers is abolished on home's up to $650,000, and id discounted on homes up to $800,000.

FHB Grant (new home) Scheme Application Form

Click below to download the NSW First Home buyers grant application form

FHB Stamp Duty Exemption Application Form

Click to download the NSW Stamp Duty exemption / concession application form

ATO First Home Super Saving Scheme

Use your Superannuation to help with your deposit. Find out how. Download fact sheet

Family Guarantees - What Lender's offer them?

Sydney Home Mortgage reviews Family Guarantee Loans from:









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When considering a family guarantee, I strongly recommend getting sound expert advice

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