Purchasing a home can be challenging, especially when saving for a substantial deposit. At Secure Finance, we offer guarantor home loans to help you step into homeownership sooner, with the support of a trusted family member.
What is a Guarantor Home Loan?
A guarantor home loan allows a family member, typically a parent, to use their property’s equity as additional security for your mortgage. This support can reduce your loan-to-value ratio (LVR), potentially eliminating the need for Lenders Mortgage Insurance (LMI) and enabling you to secure a loan with a smaller deposit.
Benefits of a Guarantor Home Loan
- Enter the Market Sooner: With a guarantor, you may not need a large deposit, allowing you to purchase a home earlier than if you were saving alone.
- Avoid Lenders Mortgage Insurance: The guarantor’s security can lower your LVR, helping you avoid the additional cost of LMI.
- Increased Borrowing Capacity: The added security may enhance your borrowing power, providing access to properties that better meet your needs.
Responsibilities of a Guarantor
It’s essential for both borrowers and guarantors to understand the commitments involved:
- Financial Obligation: If the borrower cannot meet their loan repayments, the guarantor is responsible for covering the outstanding amount.
- Impact on Borrowing Capacity: Acting as a guarantor may affect the guarantor’s ability to secure additional loans, as they are liable for the guaranteed loan.
- Seek Independent Advice: Guarantors should obtain independent financial and legal advice to fully comprehend the implications of their commitment.
Visit moneysmart.gov.au to learn more.
How Secure Finance Can Assist You
At Secure Finance, we provide comprehensive support throughout the guarantor loan process:
- Personalised Consultation: We assess your financial situation and discuss the suitability of a guarantor loan for your circumstances.
- Lender Liaison: Our team works with a diverse panel of lenders to find competitive loan options that align with your needs.
- Ongoing Support: We guide you and your guarantor through each step, ensuring clarity and confidence in your home-buying journey.
Important Considerations
- Equity Release: As you pay down your loan and your property’s value increases, it’s possible to release the guarantor from their obligation, transferring the loan solely to your name.
- Open Communication: Maintaining transparent discussions with your guarantor about expectations and responsibilities is crucial to prevent potential misunderstandings.
At Secure Finance, we’re here to provide the expertise and guidance needed to make informed choices. Contact us today to explore how a guarantor home loan can pave the way to your new home.