Is there any lenders who still lend upto 105% based on a limited family guaruntee? Servicibility no issue, just lack of deposit for the borrowers.
I know ANZ does it. Actually most of the big 4? The only reason I say ANZ does it is because I just got 105% from them. But you are best to check with experts on here.
Heaps of lenders do it - the majors and the second tier guys like St George, etc but my recommendation is to see if its possible for your parents to do the equity release so that the properties are no crossed. This of course would mean that they need to service the debt which is often the issue.
No shortage of lenders offering this. Some are much easier to deal with than others though. Cheers Jamie
ANZ make it very easy for the guarantor, and can take someone outside the family too. Plenty of other lenders, some better than others. Some will require the guarantors security to be held with them too. Cheers, Redom
Don't forget 1 of the 4 (begins with N ends with B) will require verification that the guaranteed portion can be serviced by the guarantors too. Very harsh compared to others.
For relaxed policy its got to be ANZ - doesn't have to be a family member and they aren't required to demonstrate servicing for their gaurantee portion.
Thanks Jamie, If the family home is already mortgaged to Westpac can ANZ then take a second mortgage for this family guaruntee product?
ANZ are definitely one of the easiest to deal with for equity guarantees. As Jamie indicated they take a guarantee from a friend (most lenders are restricted to parents only; not even siblings). They will also take a second mortgage behind a different lender on the guarantors property, which is also quite rare, most lenders want both properties under a first mortgage. Additionally they don't require full income verification from the guarantors. A few lenders do this (St George comes to mind), but many deals fall over when dealing with equity in retired family members homes. There's pros and cons to using an equity (family) guarantee vs having the family release equity and give you a deposit. On balance, I'd suggest the family guarantee tends to work a little better than asking parents to borrow against their equity and give you a large cash gift.
Thanks, Is there any issues in getting this guauntee removed? For example, if borrower buys property for $200k at 100% (limited guauntee of $40k) am i right in assuming that once property is worth $240k the guauntee of family home can simply be removed? Alternatively, can the guaruntee be removed from family home is $40k was put into the offset account? Not sure how this really works?
To remove the guarantee easily you need to get the LVR down to 80%. In the example given, you'd need to pay the loan down to $160k or the value of the property would need to increase to $250k to remove the guarantee on a $200k loan. In many cases even this would require a new loan to be set up but there's an easy way around this and it protects the guarantor a bit... * Rather than set up a single loan of $200k, set up a loan of $160k solely against the property you're buying. * Set up a second loan of $40k secured by both properties with the other party as guarantors. To remove the guarantee either: * Pay off the $40k loan, close the loan account and send the bank their release form asking that the guarantors property be released. * Have your property revalued, use the portability function to move the $40k loan over to your property as sole security, send a release form asking the guarantors to be removed and their title released. Quite a few lenders prefer this structure anyway. The additional benefit is it makes it clear what money to pay down asap and it clearly limits the banks recourse to $40k in the event of disaster.
Split the loan 80/20 and link the offset account to the 20% portion. Even look at fixing the rate on the 80% portion for a year or ideally take it out as an interest only loan assuming their is no interest loading. Cheers Richard
