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Guarantor loans
Getting on the property ladder as a first home buyer can be an almost impossible endeavour. The deposit required can be a significant barrier to entry, especially for younger first young buyers. One way to enable you to buy your first home sooner, is to have a family member act as a guarantor on the loan.
How does a guarantor loan work?
The guarantor provides the security for your home loan through the equity on their own home, reducing or eliminating the deposit you need to pay to purchase a home.
Typically the guarantor will be a close family member such as a parent, grandparent or sibling. The guarantor doesn’t need to put up any cash, instead the guarantor uses their equity to support you to purchase your home.
With a guarantor home loan, you may be able to borrow up to 100% of your property’s purchase, depending on the guarantor’s financial position, the lender’s requirements and the property purchase price. You may also be able to secure a lower interest rate and avoid paying Lenders Mortgage Insurance (LMI).
What should you consider when taking out a guarantor loan?
There are risks associated with guarantor loans that are typically borne by the guarantor. If you are unable to afford your repayments on your loan, that will put your guarantor’s equity at risk. It’s also important to consider the guarantors' wider financial strategy, as they may want to sell their own home and the guarantor portion of the loan will then need to be repaid, which could have financial impacts for them.
A guarantor will stay on your mortgage until their portion of the loan is paid off, refinanced, or there is enough equity in your property to release their guarantee. Some people are able to remove the guarantor within 3-5 years through savvy financial management. Keep in mind your lender may require you to pay additional fees when requesting to release a guarantor from the loan.
Why work with FABE Financial to secure your guarantor loan?
At FABE Financial, we are experienced in securing guarantor loans for first home buyers. We guide you through the process end-to-end, ensuring that all parties know what to expect.
Let us help you secure your dream home sooner.
Guarantor loans
Getting on the property ladder as a first home buyer can be an almost impossible endeavour. The deposit required can be a significant barrier to entry, especially for younger first young buyers. One way to enable you to buy your first home sooner, is to have a family member act as a guarantor on the loan.
How does a guarantor loan work?
The guarantor provides the security for your home loan through the equity on their own home, reducing or eliminating the deposit you need to pay to purchase a home.
Typically the guarantor will be a close family member such as a parent, grandparent or sibling. The guarantor doesn’t need to put up any cash, instead the guarantor uses their equity to support you to purchase your home.
With a guarantor home loan, you may be able to borrow up to 100% of your property’s purchase, depending on the guarantor’s financial position, the lender’s requirements and the property purchase price. You may also be able to secure a lower interest rate and avoid paying Lenders Mortgage Insurance (LMI).
What should you consider when taking out a guarantor loan?
There are risks associated with guarantor loans that are typically borne by the guarantor. If you are unable to afford your repayments on your loan, that will put your guarantor’s equity at risk. It’s also important to consider the guarantors' wider financial strategy, as they may want to sell their own home and the guarantor portion of the loan will then need to be repaid, which could have financial impacts for them.
A guarantor will stay on your mortgage until their portion of the loan is paid off, refinanced, or there is enough equity in your property to release their guarantee. Some people are able to remove the guarantor within 3-5 years through savvy financial management. Keep in mind your lender may require you to pay additional fees when requesting to release a guarantor from the loan.
Why work with FABE Financial to secure your guarantor loan?
At FABE Financial, we are experienced in securing guarantor loans for first home buyers. We guide you through the process end-to-end, ensuring that all parties know what to expect.
Let us help you secure your dream home sooner.