Family Support
Is your family willing to help you buy your first home or investment property?
The Family Support home loan can allow you to borrow up to 100% of the purchase price or more without the need for proof of savings!
A member of your immediate family such as your parents or a sibling can go guarantor for your loan by putting their house up as additional security for the bank.
Please read on to find out if you can get approval for this loan.
Pricing / Discounts
The Commonwealth Bank Australia (CBA) offers their basic home loan and professional package discounts for Family Support loans while ING offers their Mortgage Simplifier basic loan.
Each lender has their own discounts for guarantor home loans, so it is best to compare a few loan packages to find out which one offers the cheapest guarantor loan.
Loan packages
- 3 Year Special Rate Saver Home Loan (CBA Basic Loan): Ideal if you are borrowing under $350,000 or if you want to keep your existing cheque account with another financial institution.
- Wealth Package / MAV Package (CBA Professional Package): This loan is better suited to those of you who are borrowing over $350,000 and who want to get discounts on a range of bank products including cheque accounts, credit cards and insurance.
- Mortgage Simplifier (ING Basic Loan): This loan is well suited to anyone borrowing less than $300,000 or for anyone that wants a simple home loan package without any of the bells and whistles. If you borrow more than $300,000 then you can take advantage of ING’s Smart Pack interest rate discount for a once off package fee.
CBA lending policy
The Commonwealth Bank is more flexible than most lenders with their policy for guarantor supported home loans and do not have any specific limiting criteria.
However, the main issue that borrowers face when applying for a family equity loan is that their application is credit scored. The credit score takes into account your income, employment situation and any past ‘enquiries’ on your credit file.
The ‘enquiries’ listed include any time you have applied for a loan, taken out a personal loan with a bank, or even obtained a credit card.
The precise method of a credit score calculation is unknown, making it difficult to know from the outset, whether you will qualify.
How much can I borrow with CBA?
If you have a solid income, stable employment situation and suitable guarantor, CBA may consider lending more than 100% of the property value.
Additionally, you will not be required to pay any Lenders Mortgage Insurance (LMI) which will save you thousands of dollars!
Please speak to our mortgage brokers on 1300 399 056 or enquire online. We know if your situation will be accepted by the banks. Call us today!
ING lending policy
ING tends to be more conservative than most lenders and requires your guarantors to prove that they have a good income. This is because ING will consider using the guarantors income to help the borrower repay the loan.
This lender is highly concerned with protecting the guarantor from any risk and ensuring that they will not be placed in a position of hardship by guaranteeing the loan.
They will take the guarantors age and asset position into account to determine whether the guarantor is capable of supporting the loan.
Generally, the banks will also assess the guarantors current financial position, as well as the position they would be in if the borrower defaulted on their loan.
How much can I borrow with ING?
When taking out a guarantor loan with ING, you will be entitled to borrow a maximum of 100% of purchase price.
There is also a Lenders Mortgage Insurance (LMI) waiver on this loan type.
Despite these advantages, there are a few restrictions on the loan purpose including, no cash out or refinancing of other debts.
Home loan features
- Redraw (fees apply).
- No ongoing fees.
- Low variable rate (introductory rate for the first 3 years).
- Internet banking.
- Interest only is available (no redraw is available on interest only loans).
- Redraw.
- Annual fee is payable.
- Discounts on other bank products such as cheque accounts and credit cards.
- 100% offset account (limited transactions).
- Low variable rate.
- Internet banking.
- Interest only is available.
- Low variable rate.
- Fee free redraw.
- Internet banking.
- No interest only repayment option.
- Interest only or principal and interest repayments.
- The highest customer satisfaction rating of any Australian bank.
Can I limit the guarantee?
The guarantee can be limited with all three loan types.
CBA prefers to split the loan into two parts, securing one part with the property being purchased, and the other part with both the guarantor’s property and the borrower’s property.
ING prefers to have one loan account with a limit to the guarantee sum being specified in the loan agreement.
If you want to limit the guarantee, please contact us on 1300 399 056 or enquire online and one of expert mortgage brokers will contact you to discuss your situation.
Disadvantages
The main disadvantages of the Family Support loans offered by CBA are:
- Your application will be credit scored.
- You must have a good asset position.
- CBA prefers not to deal with elderly guarantors using their home as security for the guarantee.
- Their professional package is not as competitive as other loan products available.
The main disadvantages of the Family Support loan offered by ING are:
- ING’s lending policy is more conservative than most lenders.
- The guarantors must have a good income.
- The guarantors will need to prove their income, requiring you to provide additional paperwork.
- ING will not automatically limit the guarantee, you must request this at the time you apply for your loan.
- Second mortgages are not available as security for the guarantee.
If you doubt your ability to get approval for a guarantor loan under one of these packages, there are other banks that can consider your situation.
However it is important that you have the financial capacity to support the loan, or you will not get approval!
Apply for a family support loan today!
The Family Support loan may be just what you need to help you finance the purchase of your new home!
Please enquire online or call us on 1300 399 056 to find out which bank will best suit your situation.
We charge no fees for most loans and can help you choose from a variety of banks and non-bank lenders. Speak to the experts that understand guarantor loans today!
