Browse Forums Home Finance 1 Jun 17, 2014 12:48 pm Hi I have had to register again as I could not recall my login details (has been a while!). We are thinking about buying a house in a new area. This will involve having to sell our current property. When we bought our current property, my parents went guarantor for a portion of the loan so we didn't have to pay LMI. We have had the property for 3 years now, and have not refinanced as there has been no need - my parents were happy to stay on the mortgage. We don't have a massive amount of equity in the house - probably 20k at the least, however I do think it is likely to be 30-40k due to house prices in the area. The house we are looking at is a higher purchase price than our current mortgage (and house value). I can't see any problem with the bank approving the higher amount as doing a quick bank calculation, our borrowing power is about 3 times higher. Just wondering what the process would be, and if it will actually be possible to do this. What questions do I need to ask? Thanks JAC Re: Selling and Buying - current loan is guaranteed 2Jun 23, 2014 6:56 pm Hi JAC, Just wanted to check a few things with you: 1. How much are you looking to purchase for? 2. How much is owing on your current property? 3. How much is would you say is your current home is worth? 4. Are you looking to use any savings to go towards your new purchase? The main hurdle you may encounter is the minimum deposit requirements. All banks will require a minimum of 5% deposit plus they will also require you to come up with the rest of costs involved in the purchase such as your conveyancing fees and stamp duty. In total as a rough estimate you will need at least a minimum of 10% of purchase price for you to complete the transaction. The main issue though is that banks will not allow you to draw all the equity out of your current property. The maximum you can draw out is 95% of the property value. So for you scenario if you decided to go 95% of the property value (the maximum) you would then need to minus your current loan balance from this (as it would need to be paid out). This then would leave you with the deposit to buy your next home and it would need to be at least 10% of the purchase price. If the above is not viable your other option is looking at a obtaining another guarantor loan so that you can borrow 100% of purchase price plus costs. Finally as to what the next step/process is from here or what questions you need to ask, I would recommend you speak with a good mortgage broker. As they will advise you what will be most viable for you and what kind of interest/repayments would be applicable. It will save you the time and heart ache of getting your loan declined and shopping around with all the banks and lenders out there. Hope this help! Re: Selling and Buying - current loan is guaranteed 3Feb 22, 2016 9:39 am Hi, Just a few questions on a guarantor loan.. I am wanting to borrow around 400k for a house however the bank probably will only lend me 320k max on my own.. is it possible to get a guarantor to go for the remainder of the amount? whats the process? do they have to know all your finance history etc for them to be on the loan? and after a year or two are you able to refinance so they can be taken off the mortgage? Is there a huge risk for them and is it very complicated or is it pretty straight forward?? I have only around 5k deposit at the moment will that matter? I have no idea how this works! Hoping to hear from someone! thanks! Re: Selling and Buying - current loan is guaranteed 4Feb 22, 2016 11:08 am HI, you're looking fro a guarantor for support you with income? Not a popular thing with lenders, and if you did go down that road you could only refinance to remove the other party if you could afford the loan on your income then - so you have to understand your exit plan. The option the banks like more is if you have a co-borrwer, who can be a spouse who is not on title - or another party who is on title, but you each are responsible for the loan so its not something to enter into lightly. See a broker and get some good advice Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Selling and Buying - current loan is guaranteed 5Feb 23, 2016 12:31 am You are really out of luck I would say Zelda. Lenders only allow security guarantors nowadays, the only lender I know that allows servicing guarantors (income) are ANZ but that is only if they are parents of the applicant and are on very high incomes. As Bec mentioned, you could have a spouse as a co-borrower without them being on title, otherwise you would need the co-borrower to "purchase" the property with you and be on title. However trying to get them out of it later might mean more costs as you would probably need to pay stamp duty and maybe capital gains tax depending on the situation. The other issue is your deposit. $5K will be nowhere near enough. You need at least 5% of the purchase price as genuine savings, and then extra for stamp duty, conveyancing, etc and maybe LMI. Cheers Tom The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19679 isn't a garage level with the rest of the house a given? pretty sure they 'came around' long time ago. if you have a flat block, the garage is usually level with the rest… 1 17813 2 6115 |