Borrowing 100% Using A Guarantor

[Tim86]

Does anyone know a lender that will:

Lend 100% of a property's value without the need for LMI but instead using a guarantor for 20% of the equity in one of their properties to cover the hypothetical 20% deposit required to avoid LMI, without needing to take into consideration the income of the guarantor?

So I want to borrow $420 000 on a property worth $420 000, and use my parents as a guarantor to avoid LMI. But my parents income isn't enough to show that they can service the portion that they go guarantor on. Now they will never actually need to service that 20% portion, because I will keep up with my repayments. But I know ANZ have a policy that requires this ability to service using the income of the guarantor... for some reason. Westpac on the other hand straight up doesn't lend more than 80% on any properties bar your first buy even if you get another guarantor.

Any help is appreciated.

Thanks

 

[Rolf Latham]

Hi Tim

CBA and ST George will both "want" the parents still to be working, but direct servicing of the 20% isnt required per se.

Unless your parents security is an IP................ think real hard about this one, especially if this is for an IP, in which case many lenders that will do parentals will take a run.

Certainly, if it was on my table and it was an IP loan secured to their Sole property being a PPOR............. I would decline to work with it.

ta
rolf

 

[imbi3]

ANZ has changed policy, they can now use security guarantor. Please double check with them or your broker

 

[Tim86]

Hi Tim

CBA and ST George will both "want" the parents still to be working, but direct servicing of the 20% isnt required per se.

Unless your parents security is an IP................ think real hard about this one, especially if this is for an IP, in which case many lenders that will do parentals will take a run.

Certainly, if it was on my table and it was an IP loan secured to their Sole property being a PPOR............. I would decline to work with it.

ta
rolf

Ok here's the full story if that helps, be pre-warned it's pretty confusing.

My parents have a lot of equity in their properties, they have 1 PPOR and 4 IP's, plus another IP they have just gone halves on with me. Because the property hasn't yet got a loan on it, my parents just paid for it outright, now I'm trying to chase the banks to lend so I can get my half to pay my parents back, plus hopefully an extra $100k to carry out renovations at my own house.

The property they have gone halves on with me is worth $420 000, but I want to be the only person on the loan, so I can only borrow based on my 50% of the equity.

Westpac will only lend 80% of my half of the equity in that property ($168 000).

I want closer to $320 000 all up.

So I want a lender that will lend my full half on that property $210 000, by using a guarantor from any one of my parents properties, possibly even the property they have just bought with me and they have 50% equity in.

Then I want to refinance another property that just me and my wife own, an IP worth $450 000 which currently has a $336 000 loan on it. I would like to get 100% borrowing on that property by using a guarantor from one of my parents IP's as well. So that would give me an extra $114 000 (after subtracting the existing loan amount).

So that's what I would really like to achieve, all the while avoiding LMI by using a guarantor.

Now my parents income is only from rental income, so that is only counted at 80% because the bank deduct 20% for rental income. So my parents pretty much break even with just servicing their current loans as my dad never pays off the loans, he pretty much just chucks it all in offset accounts and holds onto it in order to have easy access to finance just sitting in the accounts. A great strategy for his purchases, but a strategy that means he can't actually service any further loans as he is pretty much already hanging onto his max capacity in the offset accounts.

So that's the situation. My current bank Westpac won't accept any further guarantors as they just do that for your first property. So I need a bank that will accept guarantors but won't need my parents to be able to service any portion of the loan.

Really any help is greatly appreciated as I'm a bit stuck right now... thanks

 

[Tim86]

ANZ has changed policy, they can now use security guarantor. Please double check with them or your broker

I met with the ANZ rep today, but he said that my parents would need to be able to service their portion of the loan that is guaranteed... I wonder if he's got it wrong?

 

[Tim86]

Also I don't have any genuine savings, I don't think (not sure of their classification). I spend all my money on investment properties and renovating them... lol

 

[Aaron_C]

Tim - talk to a broker about your situation. It sounds pretty do-able, no need to go through hoops with Westpac. Done this plenty of times - just as long as you service comfortably.

 

[Tim86]

Tim - talk to a broker about your situation. It sounds pretty do-able, no need to go through hoops with Westpac. Done this plenty of times - just as long as you service comfortably.

I hope you're right, I'll give a broker a call on Tuesday. Any recommendations in brisbane southside?

Thanks

 

[Terry_w]

Ok here's the full story if that helps, be pre-warned it's pretty confusing.

My parents have a lot of equity in their properties, they have 1 PPOR and 4 IP's, plus another IP they have just gone halves on with me. Because the property hasn't yet got a loan on it, my parents just paid for it outright, now I'm trying to chase the banks to lend so I can get my half to pay my parents back, plus hopefully an extra $100k to carry out renovations at my own house.

The property they have gone halves on with me is worth $420 000, but I want to be the only person on the loan, so I can only borrow based on my 50% of the equity.

Westpac will only lend 80% of my half of the equity in that property ($168 000).

I want closer to $320 000 all up.

So I want a lender that will lend my full half on that property $210 000, by using a guarantor from any one of my parents properties, possibly even the property they have just bought with me and they have 50% equity in.

Then I want to refinance another property that just me and my wife own, an IP worth $450 000 which currently has a $336 000 loan on it. I would like to get 100% borrowing on that property by using a guarantor from one of my parents IP's as well. So that would give me an extra $114 000 (after subtracting the existing loan amount).

So that's what I would really like to achieve, all the while avoiding LMI by using a guarantor.

Now my parents income is only from rental income, so that is only counted at 80% because the bank deduct 20% for rental income. So my parents pretty much break even with just servicing their current loans as my dad never pays off the loans, he pretty much just chucks it all in offset accounts and holds onto it in order to have easy access to finance just sitting in the accounts. A great strategy for his purchases, but a strategy that means he can't actually service any further loans as he is pretty much already hanging onto his max capacity in the offset accounts.

So that's the situation. My current bank Westpac won't accept any further guarantors as they just do that for your first property. So I need a bank that will accept guarantors but won't need my parents to be able to service any portion of the loan.

Really any help is greatly appreciated as I'm a bit stuck right now... thanks

Tim

HAve you considered the tax implications and sought some advice?

 

[Qlds007]

Hi Tim

As Rolf has mentioned The Dragon do not require income evidence for the Guarantor however wont do a Refinance using a Guarantor.

Must admit got a little lost with your thread but as Aaron mentioned sure it is doable.

Cheers


Yours in Finance

 

[Tim86]

Thanks for the help so far guys.