With the rising property prices, it gets harder every year to buy a home. The gap between income and mortgage payments just keeps increasing. Young people often have to save for a long time before they can afford even a small property. However, they will have to deal with even higher prices by then. Those who want to get a home loan quickly must think of creative ways to make this happen. There are several options including family guarantee home loans. These involve the pledge of grandparents, parents, or siblings that their own properties will serve as security on the loan. This approach provides the following benefits:
Buy a Home Sooner than Later
With the backing of your family, you won’t have to slave away for many years just to save up for the deposit and increase your income to qualify. The guarantee of property owners is enough to convince banks and other lenders that they can lend you money at an acceptable level of risk. Should anything happen, they can always recoup their money through your guarantors anyway. It would then be your family that will be pushing your to meet your end of the bargain. Their generosity allows you to buy a home sooner than most of your peers so reward their trust with consistent payments.
Increase Borrowed Amount
Thanks to the support of your family, you may not even need to provide a deposit. This is typically pegged at 20% of the home value. The amount can be secured against their asset so you can simply go ahead and get the loan without shelling out any money of your own. Get 100% of the loan instead of the usual 80%. This increase in borrowing power means that you can afford to get a bigger house and take out many of the financial stresses that come with this kind of loan.
Avoid Extra Expenses
You might even be able to avoid extra expenses such as the lender’s mortgage insurance. The LMI is usually required if you are going to borrow more than 80% of property value. It serves as a safety net for the lender as they can recover their money in case you can’t pay them back. With the security provided by your family’s assets, LMI can be waived off. They already have the guarantee they want for peace of mind. On your part, you reduce your upfront costs even more.
Get a family guarantee home loan fast and cheap with a family guarantee.
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