Effects of Assurance of Support/Bank Guarantee?

Dear all, any opinion on this matter would be much appreciated before I approach my broker/banker.

1. Does having a $10,000 bank guarantee with CBA for Parents Permanent Resident Visa's Assurance of Support affect my borrowing power in any way?
What it is: I paid $10,000 cash to CBA, who then issued a bank guarantee to the government. I cannot touch that money until 10 years later.

2. Would that show up in my credit checks or background checks for a new IP loan or refinance application?

3. If point 2 above is true (shows up in credit report), must I now declare that I have a 'dependant' because I 'sponsored' my parent's visa? Thus affecting my borrowing power.​

 

Guarantees are generally treated as if you had borrowed the money yourself. You must declare it if they ask you.

 

That's real unfair. Maybe I was misunderstood. My original thought was:

What happened on my side: I deposited $10,000 to CBA and I receives interest regularly. I can only withdraw the $10,000 10 years later (So it should be treated as a 10-years term deposit)​

What happened on government side: Received $10,000 bank guarantee from CBA. (Treated as if government had borrowed money from CBA?)​

 

I thought you meant a visa card!

You are basically guaranteeing to pay for the parents expenses, so they could be classed as dependants. But there is no dependency until they are unable to meet their own living expenses.

I would not declare it.

 

You really scared me for a sec there. (I also amended and added 'Permanent Resident Visa' to my original post!)

You are right. And would this Assurance of support taint my credit history in any way? (Not like I borrowed any money, but the opposite)

 

I can't see why it would. You should be fine.

If your cash is securing the bank guarantee, then it just means you've got $10k less cash to do anything with for the next 10 years. You should still be entitled to the interest on the cash securing the BG, but CBA will probably eat that with their fees.

You're not guarantor for a loan, and it won't affect your income/expenses, so this won't affect your serviceability.

Unless your parents are living with you, it would be hard to justify classifying them as dependants.

 

Yes I think Phase2 is right - you have 'paid' for the guarantee by depositing the money. It is not a debt.

 

My younger sister is under the rental contract (I am currently renting), she is a dependant then?

 

It's up to you to declare 'dependants'. It's usually children, but it can be any family member for whom you pay their expenses. If your sister has her own income and 'pays her way', then she isn't a dependant.

 

From what you've described it does not sound like a dependent.

I've had this come up now and again, we haven't found a situation as yet which looked like a fully dependent relative under these guarantees.

 

Hello. Have just seen this thread and just wanted to ask a question to you if I may please?
I am just going through Assurance of Support for my father too and have just had my interview.
My questions are: does Centrelink provide you with the bank account details and all you have to do is go in and deposit to that account? Or do we ourselves have to set up an account with Commonwealth?
Also, how long after the phone interview did it take for the letter to come through asking for the bank guarantee?
Thanking you kindly,
Stel.

 

1. No
2. No
3. Depends. Are you declaring they are dependant on you in the application? Are they dependant in you? Or do they have their own income and support themselves?

 

Some lenders treat a bank guarantee as a loan and others its a deposit and a undrawn loan. And depends on the bank. Undrawn loans will show on a credit file. The other wont.

eg Lender may issue a credit facility for $10K undrawn limit in favour of a landlord. Or you may lodge a security deposit and the bank holds it as a guarantee for a third party.

Your sounds like its both an asset and a potential liability.

Typically anyone requiring a bank guarantee will need you to approach a bank. Tell them you want a bank guarantee in favour of XXXX and they will either lend it as a undrawn limit (only the 3rd party can use it) or will accept your deposit and its then at risk to the third party asking for it. Then they issue a letter of guarantee to the third party. The lending one is more costly with a number of fees.