Hi All, In looking at options for loans as i dont have a huge amount of savingts for the deposit. Is it a good/bad idea if I had my folks as gaurenator with their house. Basically if we put their house under security borrowing 20K from it (putting the house under finance i guess- they own 100% of the house). Then I can borrow the rest from the bank (80 or so %) and pay both repayments back. That way I would not pay LMI costs at all. I would essentially save thousands.
Just wondering if thats an alright way to go about?
thanks and regards,
Joel
Joel
There are a variety of family guarantee style loans being offered at present but they all have 1 draw back for the parents.
All lenders will require a first mortgage on the property and this will prevent your folks from doing anything themselves in the future.My preference is that they take the loan out on their property for 20% plus acquisition costs or whatever percentage they are happy with and lend the funds to you at the same rate as they are being charged. You then take out a loan separately on the property being purchased for the 80%. Remember you could get away with only a 5% gifted deposit and that would mean they would only need to borrow 5% of the purchase price but LMI would be charged.
Doing it this way if they want to go and take out another loan for their purposes they can do so.
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for that.
So its not a bad thing for mwe to ask for them to do gather? The only problem is they will be selling our home (we've had it for over 20 years) as us kids have all grown up and moved out except me. They will be selling it in the next 2 – 3 years. Not sure what would happen with that loan then? Would it have to be payed out? or can they move it onto the next house? i guess it really depends on the loan itself.
thanks
Joel
Joel
Yes it can moved to the new property and is a lot easier if it is standalone.
If it is only 5% of the purchase price then you could have paid the principal off in the next 2 years anyway so would be immaterial.
Richard Taylor | Australia's leading private lender
ok great.
It woudl be more like 20% i think. 5% woudln't be enough to get rid of the LMI would it?
Cheers
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