First Royal stands as the backbone behind numerous triumphant home buyers who have navigated the challenging housing market, even with a modest deposit or lacking personal assets to offer as loan security.

If providing loan security for your home loan seems daunting, fear not. You can capitalize on your family property’s equity to secure the loan and compensate for an initial deposit hurdle. With our expert assistance, you can access waived Lenders’ Mortgage Insurance (LMI) fees by opting for a family guarantee home loan.

To enhance your next loan application, here’s a comprehensive guide to everything you need to know about family guarantee home loans.

Family Guarantee Unveiled: Key Insights

A family guarantor serves as a loan security derived from a family asset, typically from parents or siblings, aimed at reducing your home loan’s Loan-to-Value Ratio (LVR). By having a family guarantor, you can bypass the need for a substantial loan deposit and potentially borrow a higher amount, leveraging the equity in your family property. Furthermore, utilizing a family guarantee can often eliminate the requirement for Lenders’ Mortgage Insurance (LMI).

In essence, a family guaranteed home loan allows you to utilize your family’s assets as loan security, granting access to lower LVRs and exempting you from LMI fees.

Who can be a guarantor?

In most cases, you can be a guarantor if you are either of the following

• Parents and or Stepparents
• Grandparents
• Siblings (brothers and sisters)
• Uncles and aunts
• Husband & wife
• Children
  
  

When can you use a Family Guarantee?

Leveraging equity from a family guarantee is particularly advantageous in the following scenarios:

– Purchasing a high-value property

– Unable to meet the 20% minimum deposit and cover stamp duty

– When your parents are financially independent or free from any loans

When can I remove the family guarantee?

The guarantee can be removed provided you achieve following.

–  There is enough equity in the subject property (which is the property you bought) to stand on its own without the guarantee in the future

– The applicant is willing to pay the LMI to remove the Guarantor if the LVR is still above 80%

– The property is being sold

– The loan is paid down.

It’s generally a straight forward process to remove the guarantor and does not need to have a full re-application, but rather a simple release of guarantor form processed via the lender internally. Our brokers can guide you through the release of guarantee process very easily.

Qualifying for a Family Guarantee Home Loan: The Criteria

Lenders and banks typically assess various factors to determine your eligibility for a family guarantee home loan:

– Your financial strength and borrowing capacity

– Your family’s financial standing, particularly if your parents rely on welfare

– The equity in the family property

– Any outstanding debt on the family property, including the current lender’s details

– Plans for repaying the outstanding debt in case of default on the loan, and the lender claims the guarantee

A quick self-assessment based on these factors is recommended, as each plays a pivotal role in your application. Consult with our mortgage brokers for personalized guidance on your eligibility for a family guarantee home loan and avoiding LMI fees.

Having adequate equity is a crucial step

The loan amount accessible through a family guarantee hinges on the equity or value of the family property. To confirm whether your family property has sufficient equity to qualify as loan security, follow these steps:

1. Provide a valuation report from an independent party, as required by banks.
2. Verify the property’s current loan to determine your home loan’s LVR.
3. Ensure that the combined amount of your parents’ existing loan and the family guarantee loan is below 80% of the property’s LVR to qualify.

LVR criteria can vary among banks and non-bank lenders, and our brokers can guide you through a comprehensive comparison across 40+ institutions.

Expanding the Guarantor Pool: Sibling Inclusion

Expanding the Guarantor Pool: Sibling Inclusion

Avoid the hassle and uncertainty by discussing your needs with us. We’ve streamlined a reliable pre-assessment formula to determine if your family member can serve as a guarantor for your loan.

Securing a Family Guarantee Loan: Step-by-Step Guide

While the specific steps may vary among lenders, here are common steps to prepare for your family guarantee home loan application:

1. Confirm eligibility for a family guarantee; consult with our team for a swift assessment.
2. Verify if the property has sufficient equity to support a low LVR and bypass LMI fees.
3. Determine which family member will act as your guarantor.
4. Assess the financial position of the chosen guarantor.
5. Ensure your family member and or the guarantor fully comprehends the legal implications of utilizing their property as a family guarantee.

Moreover, many lenders may require your family guarantor to seek financial and legal advice, ensuring they grasp the obligations and responsibilities associated with guaranteeing your loan.

Rest assured with our First Royal brokers guiding you through the process with ease and confidence. Our specialists have aided countless borrowers in realizing their homeownership dreams while avoiding LMI fees through a family guarantee. We’re confident we can do the same for you.

Connect with us today, and let’s explore how we can assist you in securing a family guarantee home loan, transforming your dream home into a reality.