How to get into the Property market now. Part 3: Family Guarantee

In this article, we explain the advantages and disadvantages of using Family Guarantee to accelerate the purchase of your first Property.

Family Guarantee

Immediate family members are allowed and are often asked to assist with the equity in their own real estate properties to support their children in buying their first home.

Family members who can give a family guarantee are typically parents (including step and in-law), spouse, de-facto, grandparents, siblings, children, brother in law or sister in law, legally appointed guardian.

The main reason to reach out to family members in this way is to Assist when the loan applicants have insufficient savings to contribute to the purchase of the property.

Another important goal is to reduce the loan to value ratio (LVR) to 80% or less, and this way avoiding the additional cost of lender’s mortgage insurance (LMI).

Advantages of Family Guarantee

• Buy your home sooner
• Avoid the extra cost of Lender’s Mortgage Insurance
• Maximise the loan amount

Disadvantages of Family Guarantee

• It may restrict the guarantor’s (family member) borrowing capacity

Another alternative to Family Guarantee may be a cash gift provided by a family members. This gift needs to be documented as “non-refundable gift” to be acceptable to lenders.

At MoneyQuest Teneriffe we specialise in residential property loans to purchase or refinance your home or investment property. We are also experts in commercial Property and SMSF loans, business finance, franchise lending, car and equipment finance.

Call us on 0417 551 445 for a no obligation appointment to discuss your specific requirements.

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