Tips For Young Property Investors – Consider a family guarantee

As a rule of thumb, banks want you to come up with at least a 20% deposit of the purchase price, even though sometimes you can put less down and pay for lenders’ mortgage insurance (LMI).

However, if you can’t complete a 20% deposit, you have the option of using a family guarantor.

This is where an immediate family member allows the equity in their property to be used as extra security for your home loan.

If your parents are willing and able to become the guarantor, then this can be a great solution for young investors looking to borrow with a high LVR.

If you do this, make sure you split the loan in two portions: the portion your parents are guaranteeing and well as the portion that they are not guaranteeing.

You should work on reducing the portion that your parents are guaranteeing so you can release them as soon as possible.

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Jason Gwerder
Friday, 11 March 2022

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