Family guarantees can help you buy your home
Don’t let poor credit stand in the way of achieving your goals. A family guarantee and the right advice can see you well on your way.
Matt and Natasha had found their perfect first home. However, there were a few hurdles: they didn’t have the money for a deposit, Matt had previously defaulted on his credit card and he had also recently lost his job. Of course, they struggled to get approved finance.
Rather than miss out on the house they wanted, Natasha’s parents bought it and rented it out to tenants for 12 months to give the couple time to figure out their finance.
During this time the couple submitted a number of applications in the hope that they could buy the property from their parents, but, with Matt only employed in his current role for a short time, no deposit, and those recent defaults, they continued to be rejected.
They had nearly given up hope and started thinking it just wasn’t going to happen and that they would have to wait for their bad credit to clear. In one final attempt, they approached their local MFAA Approved Credit Adviser and explained their situation.
Their adviser researched a number of lenders and looked into the possibility of Natasha’s parent’s acting as guarantors. They had a lot of equity in their own properties, so were in a strong position to help.
Most lenders cast doubt over the couple’s chances and rejected any possibility of getting a loan approved, but the credit adviser found one lender that was willing to have a look at the application.
The credit adviser presented every bit of information possible and explained why the defaults occurred and what had been done since to resolve them and make sure it didn’t happen again.
The application was approved. Naturally Matt and Natasha were very pleased at being able to purchase the property from Natasha’s parents, who were also over the moon at seeing the plan work out.
In the end, the couple didn’t even have to pay LMI. They have since followed their credit adviser’s plan to work their way out of a specialist lending product into a prime loan and have refinanced to a take advantage of a more competitive rate. They are looking forward to paying off the mortgage faster and renovating the property.
Bevon Sinnott from Intercorp Financial Strategies is a MFAA Approved Credit Adviser. Speak to Bevon today to find out more about using a guarantor to secure finance [email protected]
* Names have been changed to protect the clients’ privacy.