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Will being a Guarantor help in this situation?

Discussion in 'Property Finance' started by jaybean, 11th Jan, 2016.

  1. jaybean

    jaybean Well-Known Member

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    The basic summary is: a family member just got a part-time job and is anxious to purchase something. However most banks need at least 6 months of an employment history behind them.

    If I were a guarantor, would this offset the need for a history? Or are guarantors used for a completely different purpose. Sorry if this seems like a stupid question...
     
  2. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

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    Sounds like he needs an income guarantor which generally can only be a spouse.
     
  3. jaybean

    jaybean Well-Known Member

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    Gotcha thanks
     
  4. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    There's plenty of lenders which will accept shorter employment time frames, as low as 1 day on the job. Guarantor isn't necessary for this deal and wouldn't be relevant.
     
  5. Redom

    Redom Finance Strategist - Sydney Business Plus Member

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    Generally with borrowing you need a couple major parts:

    1. Borrowing power. For this you need income that can be used, e.g. salary, rent, etc. Your employment terms will matter here.

    2. Deposits. What your contributing to the purchase, either through security/equity or savings.

    Guarantors (excluding spousal ones) usually provide the bank additional security. They are provided to meet the deposit component. They usually come from parents, particularly for FHBs, who are generally healthy on the borrowing power metric but don't have the deposit available.

    In terms of your scenario, employment and income generally are required to demonstrate borrowing power, not deposits.

    The good news is that there are lending options with 1 day employment, or even lending based on a signed contract to begin employment in the near future (for a strong deal) - so there's no need for a guarantor in this instance.

    In terms of guarantors for borrowing power - i think ANZ have some fancy offer available if your friends parents are very high income/net worth individuals. To my knowledge their the only ones with such an offer.

    Cheers,
    Redom