Having a guarantor, and indeed being a guarantor comes with a range of potential risks as well as the potential benefits. So, what does it mean to have a parent or other person guarantee your home loan, and what does it involve?
What is a guarantor home loan?
A guarantor home loan allows family members or, in some cases, someone else who is close to you, to ‘guarantee’ the loan. This means they will be responsible for paying back the loan if you can’t. A guarantor usually has to offer equity (such as a percentage of their own home) as security for part or all of your mortgage.
Typically, as the homebuyer, you’ll still be the main person responsible for making the regular repayments on your mortgage (including any interest and fees), but if you fail to meet those repayments, the person who guaranteed your home loan (referred to as the guarantor) may become liable to cover them.
Like a normal home loan, for a guarantor home loan, you would borrow an amount from a bank and repay it, but the guarantor’s equity essentially acts as additional collateral should something go wrong, which means the bank could take possession of it if your guarantor also can’t meet the repayments.
There may also be the option for your guarantor to only guarantee a portion of the loan, which would mean once you had repaid that portion, they would be free from any risk to their property should you miss any repayments further down the track.
We complete all the necessary paperwork with you and negotiate with the lenders on your behalf. We also help you answer these important questions:
- How much deposit do I need?
- Who can act as my guarantor?
- How much can I borrow with a guarantor?
- What are some benefits of a guarantor home loan?
- Can I borrow the full amount?
- Do I have to pay for Lenders Mortgage Insurance (LMI)?
To find the right guarantor loan today.
Call +61 3 9111 5712 to be connected with an AusLend Mortgage Adviser in your local area or fill the form below.