If you are struggling to save for your deposit, a Guarantor Loan might be the perfect product for you. A Guarantor loan is when a third-party (usually family member) provides the security for your loan allowing you to borrow up to 100% of the purchase price plus upfront costs.
You will still be required to service the loan, however you can possibly re-finance at a later date using the acquired equity from your repayments to remove your guarantors liability. In practice up to 20% of your loan will be secured by your guarantor meaning you will not require the 20% genuine savings required to avoid Lenders Mortgage Insurance (LMI).
Most commonly, a guarantor will be required to be a close family member like a parent or partner. Lenders will in some cases accept siblings and grandparents as guarantor but it will be more depending on the circumstance.
Like any other loan you will be required to prove your ability to service the loan through either pay-slips or business related documents. Your guarantor will also be required to show a stable income and most importantly proof of equity in a property that will be used to secure the loan.
