The Challenges of Getting a Home Loan
Presently the prices of houses are high. In fact, according to the latest studies, the high rates make it impossible for first-time home buyers to secure a loan as they cannot save the deposit so they can get the loan. Many applicants spend years arranging for their part of equity to get the bank loans, but by the time they make the savings, the price of property goes further up, increasing the equity requirements. How can you get into a property market if you cannot secure a loan from a bank? There is a way where you can make the initial requirements to secure a loan. Family Guarantee Home Loans are popular as it allows you to have security in place to cover for your shortfall and get a loan.
Understanding Family Guarantee Home Loans
These loans are also popular as guarantor home loans. You can use this option if you do not have the deposit to meet the equity requirements of the lending banks. Some lending institutions will allow you to use the equity of your family member’s property as a security against the loan. The additional guarantee serves as a cover to safeguard the bank’s interest when you are unable to pay the full deposit amount as per your equity requirements. These options are gaining popularity as it offers first-time buyers an opportunity to get a home loan without spending years to apply for a mortgage.
Why Use Family Guarantee?
If you cannot arrange the security deposit and cannot wait as the prices of property escalate, you will find it an excellent option to apply with a family guarantee. The deposit shortfall will get a cover as your close family members, such as your parents or siblings, will provide a guarantor home loan option that most lending institutions may approve.
Requirements for Family Guarantee Home Loans
The loan option is a family pledge, and most banks will consider this option if it comes from the close family members. So, you can only have your parents, siblings or children extend you this security so you can reach out to the bank. The banks have their policies when accepting security. Some may take the entire loan amount security as pledge on the family property while other lenders may place an 80% guarantee on the mortgage and remaining 20% from the family guarantee home loans.
However, the options remain a good option, as it will allow you to apply for a home loan sooner.
