Family Pledge: Mortgage House Smart Loan Options
Times have changed. So have mortgage requirements. The 5 year fixed rate mortgage still exists. So do a variety of other home loan products such as the family pledge mortgage.
We cover the basics of this home loan option.
This mortgage doesn’t require a deposit. For collateral, an immediate family member puts their home against the loan. The property must meet several requirements. Mainly, an outstanding mortgage cannot exist on it.
Plus, the family member must meet some requirements such as being a parent. Since these requirements aren’t monetary, it’s a great alternative to saving the deposit.
Increases Borrowing Capacity
Since the family pledge loan uses a qualified property, the borrower enjoys a higher borrowing capacity. If the homeowner experiences financial hardship and cannot repay their mortgage, the lender uses the property to recoup any losses.
In addition, they use the home to recoup losses too. Nonetheless, the homebuyer can receive up to 110% to purchase their new home.
The fixed-rate mortgage has several restrictions placed on it. Since the lender enters into a contract with a wholesaler, the borrower cannot make any changes to the financing. If they do, they incur break costs.
A family pledge loan is different. It allows the borrower to refinance it. The fixed-rate mortgage does not.
Check out our mortgage repayment calculator.
Family Pledge Loan Conclusion
For home buyers finding it challenging to save their down payment, the family pledge mortgage provides a great solution. Mortgage House is among the non-bank lenders that make it available to applicants. To start the application process, contact our loan specialists.