How does a guarantor home loan work? We have a 10% deposit which needs to include costs for stamp duty, expenses, etc. This is not quite enough and we are interested in the guarantor option.

Guarantor loans is where a second loan has security taken on your parents home. (Only for the small amount needed for the deposit)Usually you would pay this off as quick as possible. In many cases it is for the 20% deposit plus costs.

Hi Bill, with a 10% deposit you are on your way (unless there is a specific reason you want to use a guarantor?)
There are several banks (cba, Mebank, ...) that will do a 92% plus mortgage insurance loan. Your 10% will cover stamp duty plus deposit and leave some money in your pocket.
Erik

I am assuming you are looking to use a Guarantor as you do not want to incur the LMI charge so as already mentioned your Guarantor will be considered as the bank a further security Guarantors i.e. they will need to sign paperwork along with you. Some lenders will require the Guarantors to seek legal and/or Financial advice.

As already mentioned the loan would have 2 splits one is covered by the Guarantor and the other that isn't. And yes the aim would be for you to clear the portion that is guaranteed so the Guarantor security can be lifted.

This generally does not change the interest rate but there will be added costs for the legal and/or financial advice if required.

There are a few other things to note with a Guarantor loan but best to speak to a Debt Specialist.

Happy Easter.

Hey Bill,
A guarantor home loan is when an immediate family member (your parents) use their home as security. Usually guarantors secure 20% so you steer away from lenders mortgage insurance. If you wish to proceed, they will need to sign the application form with you as your guarantor. You will have two splits (two loans) one as your normal loan and another for the 20% that is secured against your parents home.
There's another option if your parents don't want to go as guarantor... If your parents currently have a loan against their home and are happy to top up their mortgage and give the funds to you as a gift, you can do this to steer away from having their home secured against yours.

Best regards,
Berti Financial
1300 421 587
www.bertifinancial.com.au

Hi Bill. There is a few ways. Generally it means there is a cross secured additional loan.. so it is against your property and the guarator. The whole deal would have to under 80% LVR.. there can be no mortgage insurance.

I can assist you with a 5% deposit lend potentially. Happy to discuss. Regards Ariel