Security And Serviceability Guarantee
Are you looking for a home loan without enough funds and take a serviceability guarantee? This type of guarantee may answer your prayer. Security and serviceability guarantee may give you support to an approval for a home loan. The chances of you getting approved largely depend on the lender.
What is a security and serviceability guarantee?
This is where a guarantor offers their property as security for the loan. They also provide assurance that they can pay any repayment that the borrower cannot repay. However, when you combine security guarantee and serviceability guarantee, the lenders are secured in an event the borrower defaults.
How much can I borrow?
You can borrower 100% of the purchase price with the help of security and serviceability guarantee. This means it is not a must you have a deposit, and you also avoid paying the Lenders Mortgage Insurance (LMI). You can also be qualified for cheap interest rates and special deposits.
Who can become a guarantor?
Generally, lenders require a guarantor to be closely related to the borrower. These may be your
Director of a beneficiary or company guaranteeing a loan.
You can provide a guarantee to the borrower when having such relationships.
When is this guarantee used?
This type of guarantee may be used in different circumstances. Generally, it is used by students who wish to purchase a property and does not have an income to cover the loan. The students can still acquire the loan when their parents offer their property as security. This reduces the lender’s risk of lending money to those who cannot service the loan. In addition, banks may also require the guardians to provide a guarantee of using their surplus income to help in the loan repayments. This provides the lenders with some additional reassurance.
Requirements for a serviceability and security guarantee
Strict criteria have been implemented due to the risk involved with this kind of guarantee. Having a close relationship with the guarantor is not enough, the guarantor needs to:
Should be aware that they will be eligible to repay the loan
Have a firm relationship with the borrower
Having met all these standards, the mortgagor may be able borrower 100% the purchase price.