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Andrew B.
Andrew B.
Balgowlah, NSW

Is it possible to guarantee one of kids home loan without having to be on the loan or the property?

6 years ago


Hi Andrew, yes it is possible to be a guarantor for your child. Your child (and their partner if relevant) would be the borrowers. You would be a Mortgagee, offering your property as additional security. Some lenders will offer a ‘limited guarantee’ say, up to 20% so that your whole property and equity is not at risk.

Hello Andrew.
I always like to have a discussion with parents looking to use their home as additional security in regard to this type of lending.
Naturally, there are positives and negatives that need to be fully understood by parents.
Additionally, some lenders are better at this type of lending than others.

Andrew. Hi and thanks for your question. In terms of guaranteeing children, this is possible where you are an existing home owner and have sufficient equity in your property. The guarantee that you provide would be for Security only, ie this could cover the absence of a deposit from the children and help them avoid the additional Lender Mortgage Insurance costs involved when borrowing above 80% of the property value.
Your name does not go on the title of the property that your children purchase, however you will have an additional mortgage on your own property.
In terms of servicing the requested loan, the children must be able to support the full borrowing amount from their own incomes. It is not possible to guarantee additional income, only additional security.
As mentioned by others some Lenders do this better than others, so it would be important to meet with yourself and the children to provide you the best solution for your circumstances.
Please give me a call if you would like to talk this through further.
Best Regards
Ken Olds
Customers First Mortgages & Insurance
1300 ASK KEN (275 536)

Hi Andrew,

By becoming guarantor to a loan you are, by default, party to this loan. Should the borrowers fail to meet their commitments then you could be liable for the portion that you have gone guarantor on. Depending on the Le der and structure you may be liable for the whole loan or just the limited portion you have guaranteed.

With the regards to the property, you are not on title of the property that your kids purchase. Your kids are also not on title of the property that is used as the guarantee.

It’s the loan which the guarantor is part of. You can also use a term deposit as security instead of property which could be an option too. You are still part of loan documents in this scenario too.

These types of loans are becoming increasingly popular and we are working on a couple at the moment. Please let me know if you would like more information

Hope this has helped
Nicole - Pink Finance :)

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