We get a lot of enquiries about home loans from first home buyers, and often the question of a guarantor, and whether that will help the client’s chances at getting approved.
We are all looking for that work life balance, and often that means we want to live in a beachside suburb like Burleigh Heads or Palm Beach. But there are hefty price tags that come with that and often a guarantor can help resolve the challenges you face. Those challenges might include not enough deposit or not enough income for a loan of that size.
The concept of a guarantor has changed from, dare I say it “when I was young”. To explain this effectively, we need to identify what type of guarantee you need:
- Security guarantee – This is the most common type of guarantee right now. A security guarantee offers their property or part of to assist in alleviating the bank’s risk. As an example, if you’re looking to purchase a property with a 5% deposit, your guarantor will offer up part of their property as security, reduce that borrowing to 80%. By doing so, the borrowers avoid paying lender’s mortgage insurance, which can often be quite large.
- Servicing guarantee – where your parents or direct family member effectively act as part owner of the property, guaranteeing the mortgage will be paid. This form of guarantor is less common as time goes on, because if everything goes pear-shaped, it is difficult for a bank or judge to enforce in a court of law, and a whole bunch complexities that come with introducing a 3rd party into the purchase.
One of the most common concerns we have to address, is where one party’s parents are offering part of the cash deposit, equity in their home, or the home to be held as security, is the if the relationship between the borrowers breaks down, the parents lose out also. Not the case any more! We have one lender, that will ensure the parent’s money or investment is protected. Ask us how!
With the evolution of the traditional guarantors role, banks have also adapted their loans to cater to the market. As an example, Heritage Bank will lend you up to 100% of the purchase, plus an extra $50k for renovations (conditions apply).
We have over 40 banks to choose from. Products include mortgages, car loans, personal loans, asset finance, insurance products and much more. Some of the best banks we tend to look at for first home buyers include Westpac, Bank Australia, NAB, BOQ, Resimac, St George, and many others.
As your dedicated mortgage brokers, we are committed to providing you with the most competitive and diverse finance needs. We have been in this boat ourselves, understand the challenges you face, and have a range of diverse loans that might just get you your first dream home!
For more info, please feel free to contact Blackbox Finance