The guarantor can use their home’s equity to guarantee part of their family members loan.

There’s no cash to pay and you choose the amount.

Benefits

 

Borrowers

  • Help you reduce or avoid Lender’s Mortgage Insurance, save you money when you need it most.
  • Maximise the amount you can borrow – up to 100% of the purchase price, plus costs such as Stamp Duty and Legal Fees.
  • There are no extra fees for the Family Pledge option. Standard guarantee and legal fees will apply.

Guarantors

  • Nominate a specific amount that you guarantee is limited to, rather than a guarantee for the entire loan amount1
  • Be released from the guarantee (provided the borrower is not in default and we would not require Lender’s Mortgage Insurance on the then outstanding loan balance under our credit criteria) much sooner than would normally occur.

 

Risk for Guarantors

A guarantor is liable for the amount specified in the Family Pledge guarantee. Your ability to borrow may be reduced if you agree to act as a guarantor. If the borrower does not pay the loan, if you do not have the cash to pay the bank your house may be sold to cover it. You will need to read and understand the full terms of the guarantee and seek independent legal advice before signing it.

 

Example

Family members can act as a guarantor and use a portion of their own home’s equity to help their loved ones, the borrower, to secure a home loan.
This solution:

  • reduces the borrower’s loan to value ratio
  • can also help them save a significant amount of money by reducing or even avoiding the need to pay Lender’s Mortgage Insurance.

Am I eligible?

  • Family Pledge is available for all owner-occupiers and first home buyers purchasing an investment property.
  • Family members who can provide the Family Pledge guarantee include parents, siblings, sons and daughters.
  • Family Pledge is not available on refinances of existing Home Loans.
  • No single guarantee is to represent more than 50% of the guarantor’s security.

 

Request to release guarantee when the Loan to Value ratio requirements are achieved.