This is the short explanation and more detailed information is available in the links at the bottom. We also offer a free and no-obligation 20 min call to discuss your personal scenario if you require, just click the link to the right or near the bottom. You can also comment or share to help your friend too.
Family pledge home loans, also known as family guarantee, guarantor or family support loans, are all virtually the same in that they allow purchasers who don’t have sufficient deposit to buy a home or save paying the mortgage insurance to buy a home sooner.
A close family member supports the application by providing a second security ‘pledge’ to cover the shortfall in the deposit. In most cases a 80% loan is the maximum allowed to avoid mortgage insurance, so a 20% deposit plus the Stamp Duty and legal conveyancing costs is required in addition.
The family pledge home loan portion fills the gap and can be maintained for up to 30 years, although in most cases it is removed much sooner as the loan is paid down and the property price rises, and the loan size compared to the property value drops to 80%.
Only a handful of lenders do family pledge home loans so wandering down to your current bank might lead to a ‘No’ whereas you could easily qualify with another lender. Different lenders have different policies as well and some work more in your favour than others so you need to study the facts or deal with a specialist that does a lot of these loans.
There are also different considerations for a Parent and also for the sibling applicants, so we have created pages specifically for each topic as below.
Complete question and answer pages are developed as below to answer all your questions about the pro’s and con’s of family pledge loans, the responsibilities, when it can be released. We also offer an obligation free 20 min phone consultation if you are still unsure how this product meets your needs. In most cases, a satisfactory loan can be obtained with little or no cost to you.