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Family Guarantee still around or has APRA killed it?

Discussion in 'Property Finance' started by Mooze, 30th Mar, 2016.

  1. Mooze

    Mooze Well-Known Member

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    Are any/many banks still allowing family guarantees for servicing or capital ? Or has APRA killed this? (Would have thought it would have gone very early)
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    For capital yes.
     
  3. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Family guarantee policy has relaxed over time of all things. ANZ + CBA remain head of the pack in this department, ANZ especially for a lot of niche areas.

    It's low risk from a LVR perspective and increases owner occupied ownership generally - APRA isn't going to care about it too much. ;)
     
  4. jpcashflow

    jpcashflow Well-Known Member Business Member

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    ANZ have a nice niche in this, just did a loan for a customer last week in this situation.
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Capital equity quite a few lenders will still do

    Anz is one of the few that may consider a partial servicing support guarantee from sophisticated peops

    Ta

    Rolf
     
  6. Redom

    Redom Mortgage Broker Business Member

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    No major changes here.

    As others have said, ANZ are the best policy wise. Here's some of why their a bit different:
    1. They can take the guarantor as anyone (doesn't need to be parents).
    2. Guarantor doesn't need to provide supporting docs of income, can be retired. They will need to tick off a declaration confirming understanding and impacted position if called on though.
    3. Potential servicing guarantor - haven't ever tested this, but if your parents are making serious dollars than they can act as servicing support too. Presumably will need income verification of guarantors on this one.

    This won't be impacted by APRA in main, not an issue.

    Its also how MANY first home buyers purchase in NSW - they won't want to hurt them too much by changes here. From a lending perspective, this is relatively low risk too (80% total LVR), typically servicing isn't an issue.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I had one of these rejected by ANZ recently as the parents, in the assessor's eyes, wouldn't have been able to meet the repayments on the child's loan if the child couldn't, because the parents were retired.
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    I'm guessing the parents security was their PPOR - no-one wants to kick retiree's out of their home.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yep - which is a fair enough call by ANZ I guess.
     
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  10. Redom

    Redom Mortgage Broker Business Member

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    Interesting - i do about one of these a month, rarely had an issue.

    However, if the guarantor need to sell their O/O to pay out the guarantor than the assessor will likely take this approach (rightly so too). They ask it specifically on their checklist from memory.

    ANZ appear to have a 'we don't want to know' everything about the guarantor approach compared to most other lenders. A simple checklist form with no evidence requirements, no servicing checks (even if retired), etc.
     
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  11. Watson1

    Watson1 Well-Known Member

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    I thought part of the guarantors checklist requires you to ask the guarantor if they would need to sell the family home if the applicant defaulted which would indicate they can afford the loan.

    Having said that, it was my interpretation that ANZ always require the guarantors to be working or have some form of income.

    Speaking of guarantor arrangements, was told ANZ will soon be requiring immediate family and not accepting anyone.

    Personally I like BoM/STG because the guarantors are not required to work. The requirement for legal advise is good too as it provides both the broker and bank some level of indemnity if something goes wrong.
     
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  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes, the guarantor believed they would not have needed to sell the family home, but still knocked back - we didn't challenge it as there turned out to be other issues, but this was mentioned as one reason by the assessor.