How to help your children enter the property market?
As property prices continue to increase, it is becoming harder to save the deposit required to enter the housing market and borrowers are turning to family members for assistance.
What is a guarantor?
Many lenders will allow a related third party (normally an immediate family member) to provide their own home or investment property as additional security to help a family member buy their own home with little or sometimes no deposit. The person providing this assistance is known as a guarantor.
The borrower must still be able to service the entire loan on their income.
How does it work?
A guarantor allows the equity in his or her own property or investment property to be used as additional security for the borrower’s loan. The primary security for the loan will be the borrower’s property but the lender will also take a mortgage over the guarantor’s property.
After the borrower has built up equity in their property, the guarantor can request to be released from the loan. The time frame to achieve this can vary depending on the original deposit saved, the number of extra repayments made and whether the property has appreciated in value over the time period.
There are some implications if the borrower cannot pay back the loan and if you are considering being a guarantor it is advised you seek independent legal advice.
To find out more contact Renee Polden at Mortgage Choice in Robina.
Call - 5562 0748 or
Email - firstname.lastname@example.org