Unless you win the lottery, saving for a deposit can be the hardest thing about getting into the property game. And for many of us, mum and dad just aren’t in a position to be able to help with a deposit.
But there is one other way your parents (or any other immediate family member) can give you a hand – by being your guarantor. With a Family Guarantee, the guarantor (e.g. mum or dad) agrees to use the equity in their property as additional security for your home loan. This can be limited to the deposit amount, rather than the whole amount borrowed, which means you could cut down the deposit saving slog and get started straight away. Plus, you could also avoid paying costly Lenders Mortgage Insurance (LMI).
Lenders Mortgage Insurance (LMI) is insurance to protect your lender if you have trouble with your repayments in the future. LMI can be an added expense when you’re buying your home, but you can avoid it if you save more than 20% of the value of your property to pay as a deposit.
To find out more about our Family Guarantee option, speak to a Home Finance Manager.