Family Guarantee Home Loan

At JFS Financial Strategists, we're Mortgage Brokers helping clients Australia-wide access a Family Guarantee Home Loan

5.0

from 140 Reviews

Header Photo for JFS Financial Strategists

Family Guarantee Home Loan for Home Buyers

JFS Financial Strategists are on top of hundreds of successful home buyers who cracked the housing market even with little initial deposit. You can leverage your family property’s equity to compensate with the initial deposit and even skip LMI fees using a family guarantee.

We’ll also take you through several lenders and recommend preferable loan rates for you and your family to ensure you choose what’s best for the entire family.

What is a Family Guarantee for Home Loans?

A family guarantee is loan security provided by your immediate family member (typically your parents) to reduce your home loan’s Loan to Value (LVR) ratio.

So instead of providing a higher loan deposit, you can borrow a higher loan amount against the equity in your immediate family’s property or investment property. This can also help you avoid paying for Lenders’ Mortgage Insurance (LMI).

Hence, the bank or lender can now mortgage your family’s property, turning it into loan security, allowing for a lower LVR home loan with no LMI.

When do I Need a Family Guarantee?

A family guarantee is most useful for your home loan when:

The property is highly-priced, and/or you are qualified as a high-income earner.
Your savings cannot meet the 20% deposit and processing/stamp duty fee.
Your parents don’t rely on welfare and are, if possible, financially independent.
Your parents don’t have any outstanding debt or have a considerably low debt on their home or property that you’ll use as loan security.

How do My Family and I Qualify for a Family Guarantee?

Most banks and non-bank lenders will assess the following factors to determine if you qualify for a family guarantee home loan:

Your personal borrowing capacity
Equity on your parents’ property
The bank which holds the existing mortgage for your family’s property (if any)
Your parent’s income and financial strength
How do your parents pay off the outstanding debt should your lender claim the guarantee on loan default.

Think those factors through and do a quick self-assessment as they considerably impact your application strength. We can also give you a preliminary evaluation and work together to maximise your borrowing power to reduce your LVR and avoid paying for LMI.

How Can I Tell If the Guaranteed Property Has Enough Equity?

Banks usually look into the property’s current loan standing and may require you to submit a valuation report from an independent party to evaluate the LVR for your home loan.

Suppose the total of their outstanding loan plus the borrowings from the family guarantee loan are less than 80% LVR of the property. In that case, your parents’ property will qualify as a security.

But note that the LVR will vary among banks. It helps to have a team of financial strategists to help you find lenders that offer at least 80% LVR with competitive rates.

Which Family Member can Provide a Family Guarantee?

Most banks will accept the following guarantors for a family guarantee home loan:

Parents
Spouse
Grandparent
Guardian
Sibling

What are the Steps in Securing a Family Guarantee Loan?

Some banks have fewer or more steps before you can secure a family guarantee loan. But these are the steps you need to know about family guarantee home loan applications:

Ensuring that your parents’ property qualifies as a family guarantee
Checking if the guarantor property has enough equity
Identifying the family guarantors
Evaluating the guarantor’s (your parents’) financial position
Discussing with the guarantors the legal impact of providing a home loan family guarantee

Moreover, some banks will ask your parents or guarantor to seek legal and financial advice so that they will fully understand the responsibilities of a home loan guarantor.

To gain confidence throughout your family guarantee home loan application, feel free to speak with our specialists at JFS Financial Strategists today. Contact us to see how we can help you secure a family guarantee home loan and make your dream home a reality.

Ready to chat to one of our team?

Book an Appointment

Our Recent Reviews

Jamie delivers without fail! He has been our go to guy as he makes things happen. Unlike other brokers, Jamie looks beyond the surface and invests time to understand his clients and their goals. He is always reachable and in contact promptly, keeps us updated throughout the process and is always a pleasure to talk to. He is a professional and knows how to get things done. His friendly nature and humour is the icing on the cake!

Pj R

Very professional and straightforward, gets job done in no time

Minh Nguyen

Absolute legend to deal with, no major issues encountered and they took care of business

Tyrone Wills

Jamie and the team at JFS Financial Strategists made the mortgage pre-approval process smooth and stress-free. He was efficient and completed everything quickly, which significantly eased the pressure. Highly recommend working with him for any mortgage needs.

Catherine Piasini

Frequently Asked Questions

How Much Deposit Should I Have?

Most lenders will require a 20% deposit for home loans and processing fees. That’s why we suggest having at least a 20% deposit so we can better negotiate the rates for your loan.

Otherwise, we can look for other solutions such as a Family Guarantee or government grants such as the First Home Loan Deposit Scheme (FHLDS).

How Much Will Getting a Home Cost?

Here is the breakdown of costs in processing or buying a new home. Note that your real estate broker may have more or fewer requirements and fees depending on several factors.

- Home loan deposit (we recommend a 20% deposit if you don’t have government schemes in place)
- Legal fees
- Lenders’ Mortgage Insurance (LMI), although we can help you negotiate for an 80% LVR with no LMI for home loans depending on your financial position.
- Lender’s Establishment Fees for Specialist Loans

Furthermore, your local council may require you to pay the following fees:

- Government Registration & Transfer Fees
- Due Diligence Fees (pest inspection, strata report, etc.)

Aside from legal and lending fees, you should also note labour costs, moving, and furnishing your new home. Don’t forget about living expenses and your monthly mortgage repayments.

What if I Can’t Make the 20% Loan Deposit?

Usually, you only need to have a minimum deposit of about 5-10% of the property value to purchase it.

But if you still don’t have that amount, we recommend opting for a family guarantee, especially if your parents have considerable equity in their property. Otherwise, paying for LMI should help you get finance as long as you and the house you want to purchase are eligible.

Why Do I Need a Mortgage Broker for Property Investing?

Having a time-tested and proven mortgage broker can help you:

- Thoroughly assess and determine your borrowing capacity.
- Understanding what documents you need to prepare when buying a property
- Make sure you have enough equity and set an appropriate property budget.
- Develop a long-term and sustainable financing strategy
- Establish a sustainable and reliable financing strategy
- Take you through different partner specialists (solicitors, tax and depreciation experts, mortgage brokers, and buyer agents)

Property investors should also walk away with an improved loan portfolio with our help at JFS Financial Strategists.

How Can I Tell if Property Investing Works for Me?

Before venturing into property investing, make sure you have:

- Extra cash flow after deducting living expenses and outstanding debts
- Saved enough equity or deposit in a property.

Besides, remember that investing incurs varying risks. So we recommend having an investor’s mindset and trying to mitigate the risks of investing by looking into what you will earn in an investment property.

That means going out of your way to make several enquiries just to ensure what you’re venturing into is right for you.

What is LMI or Lenders’ Mortgage Insurance?

When applying for a home loan, you should hear the term LMI or Lenders’ Mortgage Insurance from your bank or broker.

You pay your insurance provider a one-time fee when applying for loans above a specified Loan to Value Ratio (LVR).

LMI is required when the bank or lender is exposed to higher risk on your loan. What happens when you’re borrowing more for less deposit.

If you default on the loan and the bank sells the property at a loss, the LMI insurer will reimburse your lender for the loss. On your end, that means you can borrow more and purchase higher-valued properties. The only con is that you need to pay an LMI fee which increases along with LVR and loan amount.

Who Are We?

At JFS Financial Strategists we are big about saving you time and money so you could spend more time on doing what you love. We take over the project from start to finish, through research, reviewing the fine prints, negotiations with lenders and their credit managers, comparing rates and fees to achieve your goals.

How Much Amount Can I Borrow?

The amount and Loan to Value Ratio (LVR) you can borrow will depend on your capacity to repay the loan. In other words, your net income is gross income minus tax and other expenses you need to make.

Contact

North Strathfield, NSW

0401 855 096

JFS Advisory Pty Ltd ABN: 19 623 513 119. Credit Representative #427424 is authorised under Australian Credit License #387025

Disclaimer: This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.

Cashback Offers: From time to time, we may run campaigns that include cashback in the form of cash gift cards. The gift card would be set to 25% of the total agreed dollar value, and distributed half yearly within the first two years. Cards will not be issued if loan facilities were discharged within the first 24 months.