Can You Borrow 100% with a Guarantor?
All home loans pose a risk for the lender. The average mortgage size in Australia has risen to $550,000. Decades ago, the average home loan size hoovered at $150,000. Since lenders make several high-ticket mortgages, they must ensure that the money will return. Homebuyers help themselves by putting the lender at ease. Those who show that they can repay the funds receive more favourable loan terms.
First-time homebuyers can improve their position by adding a guarantor to their mortgage application. With a guarantor, it’s possible to borrow a 100% loan-to-value ratio.
Lenders request a 5–20% deposit from homebuyers. The deposit lowers the amount that the home buyer needs to borrow. A homebuyer who cannot place the deposit or provide full financial documentation benefits from adding a qualified guarantor. The guarantor places their home as collateral. This lowers the lender’s risk. If the homebuyer cannot repay their mortgage in its entirety, the lender can recoup its losses.
A guarantor can start repaying the mortgage. If that’s not an option, the lender collects on the guarantor’s home. This is an extreme scenario. When the homebuyer repays their mortgage on time, they start building wealth through home equity and become homeowners.
Mortgage House works with a range of clients including first-time homebuyers who require a guarantor. We also offer several tools including our Mortgage House online car loan calculator.
Borrow 100% with a Guarantor Conclusion
When a homebuyer adds a guarantor to their mortgage application, they can borrow a 100% loan-to-value ratio. Mortgage House loan specialists can walk you through the process. Contact our team today.