Browse Forums Home Finance 1 Sep 02, 2009 8:11 pm My OH and I are in the middle of applying for a loan to buy and build on a block of land. We already own a house and thought it would all go through ok, but the valuation has come up $21k short. The bank manager asked if we could borrow $21k off someone yeah right like that's going to happen. Someone else mentioned a parent going guarantor, how does that work? If one of our parents guarantees our loan by using the security from their place, would that be enough? Thanks. Re: How does someone being a guarantor work 2Sep 02, 2009 9:11 pm Hi, It would depend on how much equity your parents have in their home. A bank would require a valuation to be done on their property, I would say. Then any debts already secured by that property (eg if they have their own home loan) would need to be deducted from the valuation amount, to determine how much equity is available as a security property. If that amount exceeded $21k, that would most likely be acceptable to the Bank. However, your parents would obviously need to agree to sign documentation. Effectively, if they guarantee your loan, if you fail to make repayments, and the Bank sell your house, any short-fall from that sale (ie any left over debt) will have to be met by your parents. This may involve them also being required to sell their home to clear your debt. You should all be very very clear about what you are signing yourselves up for before you go ahead with anything like this. MagicJ I finally have my own reno thread: viewtopic.php?f=1&t=28335 The reason a dog has so many friends is that he wags his tail instead of his tongue! Re: How does someone being a guarantor work 3Sep 03, 2009 2:40 pm Hi, Magic J is correct in what he is saying. Your parents would be required to seek independent legal advise to ensure that they have a good understanding as to what is involved in a parental guarantee. Trent Bartels Residential & Commercial Finance Broker A & B Financial Solutions ...Solutions for your future info@abfinancial.com.au http://www.abfinancial.com.au Re: How does someone being a guarantor work 4Sep 03, 2009 9:26 pm My parents just signed a parental guarantee today actually. For a relatively small amount like you too. The bank will get your parents house valued for equity. They'll almost certainly have the amount you need if they've been paying it off for a few years. Then the bank will send you the loan offer, as well as a requirement your parents see a soliticor to explain to them what it means being a guarantor. This will cost you a few hundred almost. Its worth it. It may also get you out of paying LMI. Just make sure you make the repayments! guarantor home loans 5Sep 03, 2009 9:38 pm You can find more information about home loan guarantors in these threads viewtopic.php?f=31&t=16965&start=0&hilit=guarantor viewtopic.php?f=9&t=20763&start=0&hilit=guarantor My garage door has started playing up recently. Sometimes (and getting more frequent) when I press the button to open it, it wont. The motor is an ATA GD0-6V3. Red and… 0 2674 Being an owner builder is no walk in the park. It’s a challenging endeavour that requires dedication and hard… 0 10003 Block of two storey townhouses requires painting on the roof. A brick parapet wall separates each unit and extends above the tiled roof. The parapet walls require sealing… 0 3502 |