Did You Know It’s Possible to Purchase a Property Without a Deposit?

If you have a family member that owns a property, they can offer up equity as additional security to your loan which means you could borrow 100% of the property purchase price + associated costs such as stamp duty and legal fees.

This is known as a Security Guarantee or a Family Guarantee.

What’s the advantage of a Family Guarantee?

– You may be able to buy your home or investment sooner since you are not required to save the full deposit.

– You could potentially avoid paying Lenders Mortgage Insurance (LMI) which can save you thousands (you typically pay Lenders Mortgage Insurance once you borrow over 80% of the value of the property)

How Does it Work?

The Family Guarantee works by splitting the total loan amount across two loans.

One loan secured by the property being purchased with the loan amount being typically 80% of the purchase price and the second loan or the balance loan being partially secured by a family members’ property.

As the borrower with a Family Guarantee loan, you must meet the lenders criteria and be able to service the entire loan amount.

Also, before deciding to offer their property as security your family member needs to be aware of the risks associated should you default on your loan.

A number of lenders will require the family member to obtain independent legal advice prior to signing their loan documents.

If you would like more information on loans involving a Family Guarantee please call 0408 648 107