Several Australian lenders offer the ability for immediate family members to use the equity in their own home to help other family members get in to the property market without needing a deposit.
It comes with conditions and some potential traps for the unwary.
How does it work? Let’s say your parents or your partner’s parents have a home that they own outright. For this example, we will assume that he home has a value of $500,000. They can offer to be a guarantor on the purchase of your first property. They can offer up to 80% of the value of their property, in this case 80% is $400,000, in lieu of you needing savings for a deposit. They can also cover the stamp duty costs. This allows you to borrow 100% of the purchase price plus anything needed for stamp duty.
It is a nice way to give adult children a leg up into the property market. However, it does come with a few conditions and things to be wary of:
Talk to us if you would like help with a loan featuring a family guarantee.