If you don’t have a 20% deposit and would like to avoid lenders mortgage insurance (LMI), a guarantor can provide additional security support if they are eligible.
Guarantors are usually eligible family members with enough equity to provide additional security, this feature is only available with a small range of lenders.
The guarantor loan may allow you to borrow between 100%-110% of the purchase price, a loan common among first home buyers struggling to save a deposit but have the capabilities of servicing the loan.
The guarantor loan or family pledge loan as it is also sometimes referred to, can strengthen your loan application as you don’t have the extra hurdle of the LMI policies and get you into the market quicker.
There are also risks involved with these loans, but Complete Home Loans will explain and ensure all applicants and guarantors understand both the pros and the cons.