Hi All
I have a question regarding the use of a family pledge in securing my first home-loan.
I am looking to purchase off the plan for approx $400K. An immediate family member is prepared to go guarantee on the loan. I have been advised by SGB that the guarantee will be for 20% therefore reducing the LVR to 80% – appreciate that I am liable for the 100%.
There isnt a great deal out in the WWW that provides much information on the family pledge so your views on this arrangement would be appreciated. I would also like your views on the life of this option. Will it follow the same path of the 100% loans that have been offered by some lenders?
I uncertain if this is relevant but here is my situation:
Income $111,000 gross PA (no HECS)
Personal Loan $11,000
small credit card debt
excellent credit record
nil deposit.Thanks!!
Personally i dont like the FP style loan and never recommend them to clients as their is too much of an issue for the parents providing the Guarantee.
Until the LVR is down to 80% your parents will not be able to move (with exception) refinance or borrow additional funds themselves. If they have a loan on their property they will have to refinance this to the Dragon.
They would be better off borrowing sufficient in their own right to lend you the 20% deposit plus enough to repay your personal loan and you set this loan up on a P & I basis. You then take out an IO loan with 100% offset on your property and go hammer and tong to pay them back as quickly as possible.
This way they can keep any loan they have with their lender and you can reduce the loan as you go. Even apply the FHOG straight into their loan to make an indent on the principal from day 1.
Have to be careful to step through the genuine savings requirements but all in a lot cleaner and easier for all parties concerned.
Richard Taylor | Australia's leading private lender
Many thanks Richard, appreciate the prompt response!
My parents property is unencumbered therefore no finance implications on their behalf.
Your thoughts on the life of the FP options – do you believe they will be removed from sale by the lenders?
Thanks again, David
Hi David
Maybe not removed but certainly varied considerably to imply more risk to the guarantor.
Remember whilst your parents property maybe unencumbered today do they want to not be able to do anything for the next XYZ number of years whilst your debt is still secured against it.
As you can see i am not an advocate.
Richard Taylor | Australia's leading private lender
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