Myself and a friend are looking to purchase our first property together in order to pool resources. We both have steady and reliable jobs but currently have no deposit. We are looking to purchase a property in sydney to live in while we renovate order to make the most of the first homeowners grant and hold our jobs. My mother has an extra property in the country which is fully owned and valued at about $120, 000. I have been told that I can possibly use the equity from this as a deposit? How does this work and is this the best solution? I am aware that a 100% loan is not such a good idea. We will also need spare money to spend on renovation costs.
Yes, some banks allow parents property to be used as additional security. eg. St George has a family pledge option. Parents property can be used for a fixed amount – eg 20% only so if thngs go wrong, the bank can only claim up to this amount.
Parents do not need to provide any income for serviceability – just the security property.
When your property rises you can release the guarrantee and your parents property.
Terryw
Discover Home Loans
Parramatta
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Hi Jac-dow,
Why is it that you believe 100% loans are not a good option? The terms can often be quite reasonable on these loans. They do not suit everybody, but they can be appropriate for some situations.
Kind Regards,
Cameron Perry
Director
Perry Financial Strategies
Level 13, 30 Collins St
Melbourne VIC 3000
Ph (03) 9662 1999
Fax (03) 9662 2044Hi jac dow,
This is exactly how me and my partner were able to secure a loan for our first property. We saved about 30K but most of that was eaten up in nasty stamp duty. We ended up with a 5% deposit (95% LVR) with 20% security over one of my parents’ places, which gets released when we reach 20% equity as Terry mentioned.
Servicabilty on the loan is no problem at all, and we are paying off approx $600/month extra repayments to try and release the guarantee as quickly as possible. Perths CG also helps!Good luck,
Chris
I am with Cameron and would suggest a 100% standalone loan rather than a family guarantee especially if you are having to use your mothers equity when buying with a friend.
Might be slightly different if it was a girlfriend or partner but i would be loathed to have my mother security up for grabs for a mate.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 6.89%**
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Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
I’m all of a sudden thinking about a 100% loan which has a 6.99% interest rate and no ongoing monthly fees and charges would be a good thing. Otherwise, there are a couple of other products around which wil allow you to use Parents security. One of them happens to be a Low-Doc Product which may make it even easier again to get the funds.
Your options abound squire…
Stuart Milne
Non-Conforming Specialist
READY Mortgages
http://www.readymortgages.com.au
[email protected]
Mob: 0404 056 055
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