Family members helping their kids to step foot into the property market without 0% deposits, many lenders allow a family members to help you to buy your own home by providing their property as a additional security. The person providing this assistant call Guarantor! With the help of grantor you can borrow over 100% of purchase price and other cost such as stamp duty.
Did you know, there are big differences between different lenders and their guarantor loan?
- How does it work?
The person being guarantor allows this equity in his or her own property to be used as additional security for your loan. But primary security will be your own property, which you are going to purchase. Same-time lender will take mortgage over your guarantor’s property.
- Who can be a guarantor for you?
Generally guarantor are limited to close family members, this would be parent of borrowers. But again, different lender has different criteria some allow extend family members such as grandparents, sibling, de-facto partner. Workmates, friends and associates are not allowed as your guarantor.
- What are the consequences if the borrower cannot pay back loan!
If you are not able to pay the loan as per terms and condition the lender can take legal action against you and some circumstance your guarantor.
- When can I release guarantor
Guarantor does not mean that entire terms (normally 30 years) you require them. You should apply to remove them with your lender when you met following criteria.
– If you haven’t miss any repayment in the last six months
– When you can afford the repayment
– Your loan is for less than 90% of the property value