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When using a guarantor for your home loan, you may not need a deposit, if you have a parent, family member or friend that may be prepared to go guarantor on your home loan, and offer a security guarantee on their existing property to help you buy your home. This is a good option for many, as it may help you get into your home sooner. Lets look at how this works. The guarantor (parent, etc) owns current home with enough equity to support the purchase you are considering.
For example, if your parents have a home worth $400,000, and they have a current mortgage of $150,000, then there may be enough equity to support you, and provide a guarantee to purchase your home. The Bank or lender will look at the purchase price of the property you are thinking of buying, let say for example its cost is $300,000, then the bank or lender will take 20% of the purchase price, in the example this would be $60,000 (20% of the $300,000 property you are thinking about), and secure that debt over the guarantors (your parents) property. The reason why the bank secures 20% over the guarantors property, is that these home loans, cant be mortgage insured (this is when the loan value is greater than 80% of the property price). The home loan is still in your name, but the guarantors are offering a security guarantee, that is, using there property as additional security for the bank, thus allowing you to borrow 100% or more of the purchase price (you can also borrow some fees, if needed to).
If you would like some more information about using a guarantor for your home loan, contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.