Hi everyone,
My first post here, so go easy on me!
My partner and I wish to buy a house, but are in a tricky situation regarding finance.
I am a day trader on the Stock Market(no abn) but only have 1 years financials($62k taxable income).
My portfolio is worth almost $300k, and I have an IP with 2 other people, with my share of equity being about $200k.
This property is on the market and when sold I should get about $160k after tax profit(worth $800k, owe $200k)
Ive also got a bad credit rating due to one of the other people involved in IP defaulting continuously.
My partner works perm/part time and earns about $36k taxable income.Ive been told that a Guarantor Loan would be suitable for us, as my partners parents are very willing to help us and go guarantor for repayment or deposit or both…whatever it takes!
Could someone please explain how these loans work, and exactly what we would need to get one.Any help much appreciated
I have not heard of a specific loan product called Guarantor Loan
however a simple search of google has come up with the information and it seems to exist
.
http://www.homeloanexperts.com.au/no-deposit-home-loans/guarantor-loans/
http://www.guarantorhomeloan.com.au/
http://www.guarantorhomeloan.com.au/what-is-a-guarantor-loan/
http://www.ownyourfirsthome.com.au/Fast-track-your-loan-and-save-thousands-use-a-guarantor
http://www.mortgagechoice.com.au/downloads/File/Tips%20And%20Checklists/Guarantor.pdf
http://www.smartsearchfinance.com.au/St_George/family_pledge.htmlproblems / drawbacks / cons
http://www.aussielegal.com.au/forum/forum_posts~TID~6525.htm
http://loansense.com.au/blog/homeloan/home-loan-guarantor/
http://www.jetlending.com.au/no_deposit_guarantor.htm
http://www.guarantorhomeloan.com.au/protecting-the-guarantor/
http://www.guarantorhomeloan.com.au/removing-the-guarantee/
http://ezinearticles.com/?Should-You-Sign-As-a-Loan-Guarantor?&id=2150197
http://www.mannering.com/lawsite/guarantee1.htm
Ive been told that a Guarantor Loan would be suitable for us, as my partners parents are very willing to help us and go guarantor for repayment or deposit or both…whatever it takes!
Ethically you should show the drawback links above to your in laws so they know the risks involved to them.Your Parents may be required to go to a solicitor and have the mortgage documents and risks explained to them and then the solicitor stamps and signs the mortgage documents. This is usually required by banks to protect them legally from your parents coming back later and stating they were unaware of the risks involved.
How this loan works is that the lender's loan is secured by your guarantor, so if you do not make the payments then your guarantor becomes legally responsible for your loan and your payments. So if they can't make the payments the bank will sell their assets to pay of your loan.
Another method that you might want to investigate is a bad credit loan. (do a google search)
You get your in-laws to borrow as a line of credit against their home asset for 30% to 40% of your home loan amount you require.
They give you 30% to 40% for your deposit and you then apply for a 60% to 70% LVR bad credit loan.
As your credit rating improves you refinance down the track to a Low doc loan.
This way your in-laws only lose 30% to 40% of your home loan if you default.Or you can keep paying the line of credit home loan off for them even if your investment house is repossessed. So the risk to your in-laws is less.
http://www.badcreditfinance.com.au/
http://www.globalise.com.au/customer-profiles/bad-credit-loans-personal-loan.shtml
http://www.nonconformingloans.com.au/I cannot advise you on which way to go but I am giving you the information for you to decide what method you wish to implement.
You generally can't get a guarantee from someone for income or servicing purposes, unless from a spouse. There are issues with lending to people if they cannot demonstrate how they will pay the loan. If the person is a part owner of the property then it is ok – maybe a trustee or beneficiary of a trust for eg.
Guarantees for the equity part are generally available for parents to guarantee kids loans. The parents property can be used as security in addition to the property being purchased- but they must have their loan with your bank too.
But if you will have $160k cash then you won't need the guarantee.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Nix340,
You will be hard pushed to get finance for a servicing guarantee as Terry says. I dont know of anyone nowadays that will do a income or servicing guarantee. You can use your partners parents property and as Terry says they will have to refinance any debt over to the lender if they have a debt associated with the property. This is known as a Pledged Asset Mortgage and you could obtain 100% of the purchase property.
Being O/O as well would be a lot easier and with the impairment on your name it really depends on the level of impairment associated with your individual credit file. If you had two years financials there are some lenders that will look up to 80%. But, in your instance a Lite Doc loan is probably the only option up to 75% due to the impairment. Depends on the level of impairment. There are lenders who will assist with defaults with a variety of rates.
The only issue is finding a lender who will offer you a good deal. Hope this helps.
Regards,
L.A
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