Guarantor support is available to assist customers obtain a home loan when they are unable to provide adequate security in cases where the loan amount exceeds normal lending margins: and/or they are unable to provide adequate servicing ( for non personal borrowers only).
Borrowers may consider adding co-borrowers to their loan application if they do not wish to obtain support from a guarantor.
Note: a personal borrower must be able to service the loan amount based on their income and total repayment commitments. Under no circumstances can a guarantee be taken where the borrower is unable to demonstrate servicing on their own right.
Guarantor Support enable customers ( in particular first home buyers) to:
- Borrow more funds that they may have been eligible for without a guarantee
- Purchase the property they want rather than having to settle for a cheaper alternative
- Enjoy a sense of Independence and financial security having purchased their own property
- Eliminate the need to pay for Lenders Mortgage Insurance ( LMI) where the guarantee reduces the customers Loan valuation ratio to a level where LMI is not required.
A guarantor must meet the same criteria an an eligible borrower and be related to the borrower in one of the following ways:
- Immediate family members, which are restricted to: Spouse, Parents/In Laws, Children, Siblings, Legally appointed guardians
- Company or trust entities where the relationship between the shareholder/director/trustee and the borrower is in line with the above
- Trust and its directors
- Company and its directors
The following types of guarantors will not be considered by any funders:
- Individuals receiving government pension and providing a residential property ( principal place of residence) as supplementary security
- Individuals who are not related to the borrower as described in the above Eligible guarantors or exceptions below - eg. cousin, friend, boyfriend/girlfriend and neighbour
All applications with the below types of guarantors will be considered on a case-by-case basis:
- Individuals who are related to the borrower in the following ways: Grandparent, Grandchild, Former Spouse, Aunt or Uncle, Nephew or Niece
- Company and Trust entities where the relationship between the shareholders/director/trustee and the borrower is in line with the above
- Individuals who are self-funded retirees
- Individuals who are self-funded retirees and the security used to support the guarantee is a jointly owned with an eligible borrower.
All guarantors must be formally interviewed separately from the borrower/s, in person and must consider the broker must consider the following aspects as part of their interviewing process and to determine if independent legal advise is required.
- Does the guarantor understand English?
- Can the guarantor understand their role as guarantor?
- Have they previously acted as Guarantor and has the Guarantor provided a mortgage?
- Does the Guarantor appear to be under duress?