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Since the Global Financial Crisis, unfortunately there is very little option to fund your first home with no deposit but if you have parents or anyone else willing to offer a property as collateral security to your new home you can borrow 100% or more for your purchase.
A security guarantee is another house the bank can secure your deposit and/or fees against.
So essentially you borrow up to 80% against your new home and the remaining 20%, plus any applicable fees and charges are secured by your new home PLUS the additional house your family or friend are offering.
o You do not have to save a deposit;
o Buy your house now;
o Save thousands on Lender’s Mortgage Insurance
o More home loan options to choose from;
o Consolidate any other personal debt such as Credit Cards, Personal Loans etc. so your monthly outgoing is reduced.
When you are ready to look at removing your guarantee, your Mortgage Broker will arrange a valuation on your property and ask you what the balance of your loan is as there are two ways you can release the guarantee;
o Reducing your home loan, or;
o Increase in value of your property.
If you owe the bank >80% of the value of your property and you’d like to remove the guarantee, you’ll have to pay Lender’s Mortgage Insurance (which can generally be added to your Home Loan so you don’t have to pay out of your own pocket).
The best option is to try and wait until you have 20% equity in your home to release your guarantee so you don’t have to pay the Lender’s Mortgage Insurance.
Our Mortgage Brokers are here to assist you with any questions on the above. Please call us on 1300 559 949 or email firstname.lastname@example.org