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20.01.2022 Is a family guarantee right for you? Entering the property market is no easy feat for a first home buyer, but even parents who aren’t prepared to hand over cash for a deposit may help by being a guarantor on a loan. Before taking the plunge however, it’s crucial to be aware of the implications involved. ... Here are three questions to ask yourself to see if a family guarantee is right for you: 1. Am I financially fit to be a guarantor? 2. Do the benefits outweigh the risks? 3. Are there other ways I can help without being a guarantor? Contact Michael Marcou to get started.

19.01.2022 In a previous post I gave you a list of tips. Now I want to give you more information on each tip. 1. Am I financially fit to be a guarantor?... The very first thing you should be certain of is whether or not you are in a financially capable position to pay off the loan if the borrower finds that they can no longer do so. There can be many disruptions to an income, such as loss of employment or a serious accident, and some types of guarantor loans hold the guarantor legally accountable to ensure the mortgage is paid off. You need to be in a strong financial position and have enough equity in your property to be a guarantor. Some banks even want to make sure that the guarantor can service the full debt as well, so it’s always advisable to get independent legal or financial advice if you’re considering it.

09.01.2022 In a previous post I gave you a list of tips. Now I want to give you more information on each tip. 2. Do the benefits outweigh the risks? It’s no secret that it can take a long time to save for a deposit and by becoming a guarantor, you offer the borrower the chance to enter the property market sooner. ... Lenders may treat the loan like an 80 per cent lend, so you avoid the costly lender’s mortgage insurance (LMI). You also don’t have to save up for a full deposit for the purchase, or sometimes any deposit at all. However, any time you borrow money or a bank places a mortgage over your property, there are definitely things that need to be taken into account. While in some instances I would recommend it, it’s definitely not a first option as there are certain factors that can put you or your property at risk. Your ability to borrow will also be reduced after using a guarantor.

08.01.2022 In a previous post I gave you a list of tips. Now I want to give you more information on each tip. 3. Are there other ways I can help without being a guarantor?... If contributing to a deposit is an option, it allows you a little help without needing to put yourself or your property at risk, but there are some extra hoops to jump through if a deposit includes gifted funds. With gifted funds, if less than 20 per cent of the property’s purchase price, then the banks will most likely want to see five per cent of genuine savings. Having said that, there are a few lenders that will allow you to use rent as genuine savings. So, if you’ve been renting for a while, it shows that you have the propensity to make repayments and then the reduced (less than 20 per cent) deposit may be used in that regard.

05.01.2022 The risks with guaranteeing your child's loan. You may want to help your child but it’s important you don’t go into the transaction blindly. The main risk of guaranteeing the loan is that, depending on the structure of the guarantee, you could be liable should your child default on the payments, either by taking over the repayment schedule or handing over a full repayment. If you can’t make the payments, the lender may sell the home used as security. ... If this is still not enough, the lender may also require you to sell assets to meet outstanding debt. Another major risk is a bad credit rating if default occurs. Plus, if you need to borrow money for another purpose, your property cannot be used. If you want to buy an investment property, you can’t use the equity in your home because it’s already tied up in the child’s loan. Let me help you to see if this is right for you.

02.01.2022 Minimising the risk for your child's loan. There are ways to minimise the risks. The most common is using a monetary gift or private loan. ... This involves borrowing money against your property in your name, and then gifting it to your child,you should have a legal agreement in place. Another way to avoid the risk is to buy the property jointly with your child. This means your name is on the title and you have a certain percentage entitlement. When it comes to guaranteeing a loan, it’s always sensible to speak to a professional. You should also consider asking a legal professional to draw up a formal loan document outlining all conditions of the loan, interest rate and expected repayments. Finally, outline an exit strategy. Financial situations change and, as the loan decreases with repayments, there may be an opportunity for you to withdraw your support to free up your assets without impacting your child’s loan.