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Month: August 2016

How A Guarantor Can Help You Secure Finance

 

When you’re desperately trying to save up a deposit for a home and just see the prices of property climbing and climbing, it’s difficult to remain patient. But there is another way: a guarantor can help.

If you don’t have a substantial deposit for a home loan, there are still a number of ways to obtain credit. These are known as family pledges and there are two types available to borrowers: service guarantees and security guarantees.

Service guarantees are less common that security guarantees, explains an MFAA-accredited finance broker, and they involve a family member guaranteeing all of the repayments on a loan, as well as being named on the property title.

“A drawback of this approach is that it usually means first home buyers are not entitled to any government grants,” she explains.

A more popular option is a security guarantee. Borrowers who have a limited deposit often use this approach. In this situation, a relative or friend (usually a borrower’s parent or parents) is prepared to use the equity in his or her own home to guarantee the deposit of the borrower.

For example, for a total loan amount of $500,000, in a security guarantor situation the borrower/s would take on the debt of 80 per cent of the value of their loan, which would be $400,000, in their own name/s.

The loan for the balance, $100,000 plus applicable fees, is then guaranteed in the names of the guarantor/s and borrower/s, limiting the guarantor’s liability while providing security for the lender, meaning that lender’s mortgage insurance is not necessary.

“This is a very popular way of first home buyers entering the property market,” she says. “It works well when borrowers don’t have a substantial deposit, but their parents own their own home. It’s a great option as long as the parents are comfortable with their child’s ability to pay back the loan.”

To find a solution that will help you own your own home sooner, speak to an MFAA-accredited finance broker.

Please contact info@millennialbroker.com.au or call 6270 0597 and ask to speak with Andrew Kininmonth or Justin Abbot.

An MFAA Approved Finance Broker is much more than your average mortgage broker.

Source: MFAA

When Was Your Last Home Loan Health Check?

Circumstances can change, leaving your home loan less suitable than it was originally. A home loan health check can reveal if you’re paying too much.

What’s involved?

Your MFAA Finance Broker can do a full home loan health check for you either in person or over the phone. They will check if your loan is still competitive and still suited to your individual needs.

Having an expert do this for you can also take the stress out of the process for you. It is advisable to get this check done at least once a year, or if your circumstances change.

Questions to ask

Be aware of what you want checked. Think about the following when you speak to your broker:

  • Am I paying an unreasonably high interest rate?
  • Am I paying high fees?
  • Am I happy with the service I receive?
  • Does my loan give me the features I need?
  • Am I paying for features I don’t use?
  • Have my financial circumstances changed

Benefits

A home-loan health check will generally cost you nothing and could save you thousands. Your home loan features could be improved or you could find yourself with a lower interest rate. A better payment structure could also be introduced, making your repayments more manageable.

Checking the state of your current loan could uncover the possibility of taking out additional finance, which can consolidate any other debt you may have or help you purchase an investment property.

With the reserve bank dropping the official cash rate to 1.5% now is the best time to be checking your financial position.

Contact info@millennialbroker.com.au or call 6270 0597 and to speak to speak with Andrew Kininmonth or Justin Abbot to organise your home loan health check.

Source: MFAA

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