CASE STUDY First Home Buyers / Time Sensitive Purchase
Kerry-Anne Simpson
Local Mortgage and Finance Broker - Caloundra, Sunshine Coast QLD
Guarantor Home Loan
Solution: Guarantor loan from parents, the parents had equity in their home and investment property.
They decided to release the equity for the deposit from the investment property due to a small mortgage on the property and tenants could cover the monies drawn down on the loan.
The property was cross-collateralized which meant that to satisfy the bank we could only find one lender that would be able to use it at this stage.
Scenario
Joshua and Maddison had been in a relationship for a few years while Joshua had been saving for a deposit to buy their first home Maddison had found herself expecting their first child and had received notice of their tenancy agreement ending in a few months.
With no savings and time to pay down accumulated debt and a baby on the way time was not of the essence. I suggested we do a guarantor loan where Joshua’s parent could grant Joshua their deposit and buying costs to secure a home.
Joshua’s parents had enough equity in their home, and by executing a home equity loan this could become a reality.
Joshua and Maddison did not want to buy a new house and land as the area to do so was too expensive for what they could afford. If this was the case, they could have qualified to use the First homeowners grant toward their deposit.
Just in time they settled on a property in the area they so wanted and to be close to family due to starting a family. This relieved the stress as the rental market was very tight and not much was available to secure another lease.
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Solution
St George was the client’s best option with the most affordable and lowest interest rate for what we needed to secure a loan option.
We used a 20% deposit amount from the equity from the investment property which had a small loan amount and good rental income so that the amount drawn down from the investment property to help Joshua and Maddison was not a financial restraint on the parents with repayment of the amount drawn down.
At this stage, Joshua and Maddison could only take St George as the guarantor’s security property as they had a mortgage on the investment property and were cross-collateralized. All other banks and the other 2 loan options wanted either a loan with their bank or unencumbered security meaning no mortgage on the property.