A Family Guarantee loan is a way for immediate family members, like parents, to help you purchase a home without them actually providing the cash for a deposit.
Your family members can use the equity in their own home to provide additional security for part of your loan amount. This solution reduces your loan to value ratio (LVR). The LVR is the loan amount divided by the value of your property. By using the equity in your family member's home and reducing the LVR to 80%, you could save a significant amount of money by avoiding the need to pay Lender's Mortgage Insurance. So you get into your home faster, with help from your family.
What are the key features?
By increasing your security through a guarantee from your family, you will reduce the loan value ratio of your loan to 80% or less and avoid paying Lender's Mortgage Insurance.
You can consolidate minor debts into the loan amount, if they are less than 5% of the purchase price.
The guarantee will be released once the limited amount of the guarantee is paid in full or (subject to approval) when the standard LVR requirements are achieved. The guarantor or borrower may request a revaluation at any time to confirm the LVR, subject to the payment of the valuation fee.
Standard guarantee and legal fees will apply. This includes land titles registration fees and the cost of obtaining Independent Legal Advice.
The guarantor can be a new or existing Home Loan customer of the same lender where you are apply for your home loan or even retain their home loan with their existing home loan provider in some circumstances
Am I eligible?
Family members who can provide the Family Guarantee include parents, siblings, sons and daughters.
You can use a Family Guarantee to buy a home or invest in residential property, and you don't have to be a first home buyer to be eligible.
Individual applicants are usually restricted to a maximum of one parental guarantee/family guarantee borrowing.
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