August 15, 2014
For many, buying a property in Australia is getting harder than ever. The two major hurdles for most is either not having a large enough contribution or the inability to meet their repayment obligations. A family guarantee is an option that you may consider.
There are two basic guarantor options. The first is a security guarantee. This is when a second property is offered to the lender to secure the new purchase. The second property is effectively the deposit and the bank will lend against the total value of the two properties. Generally speaking, the lender would prefer to lend against an investment property, opposed to a borrowers home as this reduces the risk to the guarantor.
The other option is an income guarantor. When the applicant cannot service the loan by themselves a guarantor can be added to the loan to help service the debt. Most lenders will not do this as there is generally no benefit to the guarantor. To overcome this most lenders would suggest that the guarantor go on the loan as a joint applicant so they have the risk and the reward or alternatively, provide the borrower with a non refundable gift.
Again, it is best to contact my office to discuss your specific requirements.