110 Percent Home Loan
Tue, 03/31/2009 - 15:28 — admin
Equity Guarantor or Limited Guarantee Home Loan
One way many people overcome not having a deposit available is to borrow up to 110 percent of the purchase price using security form another property to reduce the overall loan to value ratio. These types of loans are sometimes referred to a family equity or equity guarantee loans.
| New property purchase price |
$300,000 |
| Estimated Costs for this purchase (First Home Owners in NSW) | $2000 |
| Loan Required | $302,000 |
| Loan to Value Ratio | 100.66 percent |
| Parents or friends property | $350,000 value |
| Parents or friends Loan to Value Ratio | 14.28 percent |
| Parents or friend puts up security from their property | 58,400 required |
| New property Loan to Value Ratio is now | 80 percent, no mortgage insurance required |
| Parents or friends Loan to Value Ratio becomes | 30.97 percent |
Over time the debt for the equity guaranteed property should reduce through regular loan repayments.
Combined with the loan reduction acheived through regular repayments and if property values increase over time an equity increase in the newly acquired property could grow to a point where the security guarantee from the parents or friends property is no longer required.
At this time a request could be lodged with the lender to release the security guarantee property as a security for the loan. This would leave the more recently acquired property securing the remaining loan itself.
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Important!
Important Information!
All information and loan option scenarios contained within this no deposit home loan site can only be general in nature and may not suit your specific individual requirements! Always seek independent professional advice before selecting or applying for any type of finance. Information, products and services are subject to change or alteration or withdrawal without notice. Always check before acting and always seek independant professional advice.