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With the ever-increasing price of property, it may not be realistic for you to save up a large-enough deposit to buy a residential or investment property anytime soon. However, if you have an immediate family member who has a good equity stake in their property, then you can ask them to act as a guarantor for your loan. This may give you the ability to borrow up to the full value of your desired property.
In order to make use of the Family Pledge loan, you still need to be able to make repayments towards the loan on an ongoing basis but the initial requirements for a deposit won’t apply. Once you have paid off enough of the loan and your equity in the home is substantial enough, you can then look at refinancing the loan to pay off your relative.
A Family Pledge loan is a great option to help you get your foot in the door in a hot property market.

Advantages

  • Buy a home or investment property without having to provide a deposit

  • Borrow up to 100% of the purchase price and a further 10% to cover the purchasing costs

  • It is possible to redraw or re-finance to repay the family member once sufficient equity is built up in the property

Disadvantages

  • It's necessary to weigh up the risk of getting family involved as relationships may be strained if something go wrong