Hi All, First time poster just looking for a few different views out there. I am a young professional in the early stages of my career and looking to get into the property investment market, however I currently do not have a deposit as I am in the early stages of my career. I am looking at borrowing 100-105% LVR, which I have been informed is still an opportunity provided 20-25% is secured against one of my parents properties. I have run substantial calculations and expect to have the capacity to release the guarantee between 2-4 years, presuming a reasonably conservative growth of 2-4%. However I wish to jump in without the deposit as I anticipate the market I am jumping into to grow much faster then that (and at a rate faster then I can save!). With the know how this type of loan will be assessed when applying the new 'risk' based pricing of interest rates? Will I receive a higher rate due to the 100-105% LVR borrowings? Or will the effective 20-25% security put me at an effective LVR of 80%? Or is it likely to land somewhere in between? Any help here would be appreciated. Cheers!
It will only be 105% compared to your property, but overall it will be lower LVR because of the second security. Rate should be the same as 80% LVR.
You're essentially looking at a family guarantee, so 80% would be secured against your property, the remaining 25% would be secure by the family members property. Assuming they don't have a singificnatly debt over their property, the LVR there would be quite small - ideally it would be below 50% to keep most lenders happy. The most appropirate lender will depend on your circumstances, but probably more imporantly your parents circumstances.
Thanks guys. The second property used as security will be unencumbered so no issues there. My parents capability to service the guaranteed loan may though. Will lenders take this into account or is that primarily assessed on my capabilities?
No - there's a few lenders which will not require an A&L for your parents or for them to demonstrate their ability to service the debt. I do these kinds of loans for younger clients on a semi regular basis - if you put the effort in it's fairly easy to get the purchase for nil deposit and released in a relatively short period of time. Not all lenders are great in this space, so we generally use ANZ/CBA dependent on the scenario.
