Guarantor Home Loan – First Home Buyers / Time Sensitive Purchase
Young Couple with Expecting First Child, Tenancy Agreement ending
Solution: Guarantor loan from parents, the parents had equity in their own home and investment property.
They decided to release the equity for the deposit from the investment property. Due to a small mortgage on the property and tenants could cover the monies drawn down on the loan.
The property was cross-collateralized which meant that to satisfy the bank.
In the time we had it was time sensitive and in only a couple of weeks to secure a lender. We needed to look at a lender that could do the guarantor loan. A lender that would accept cross-collateralization with the 2 properties
we did find only one lender that would be able to use it at this stage.
Scenario
Joshua and Maddison had been in a relationship for a few years while Joshua had been saving for a deposit to buy their first home. Maddison had found herself expecting their first child. They had received notice of their tenancy agreement ending in a few months.
With not enough savings and time to pay down accumulated debt and a baby on the way time was not of the essence.
I suggested that we do a guarantor loan where Joshua’s parent could grant Joshua their deposit and buying costs to secure a home.
With the use of Joshua’s parents’ equity, they had in their home by executing a home equity loan this could become a reality.
Joshua and Maddison did not wish or want to buy a new house and land as the area to do so was too expensive for what they could afford. If this was the case, they could have qualified to use the First homeowners grant to use toward their deposit.
Just in time they settled on a property in the area they so wanted. This made it feasible to be close to family due to starting a family.
This relieved a lot of stress as the rental market was very tight and not much is available to secure another lease.
Solution
St George was the client’s best option with the most affordable and lowest interest rate for what we needed to secure a loan option.
We used a 20% deposit amount from the equity from the investment property which had a small loan amount. The investment property had good rental income to cover the loan amount.
This was a bonus to help Joshua and Maddison, and was not a financial restraint on the parents with repayment of the amount drawn down.
St George was the only option that Joshua and Maddison could take at this stage. The parents who were the guarantor for the loan, had a mortgage on the investment property and were cross-collateralized.
All other banks and the other 2 loan options wanted either a loan with their bank or unencumbered security meaning no mortgage on the property.
