Commonwealth Bank’s (CBA) Family Equity Home Loan can allow you to buy a home without the need for any savings or a deposit. The bank relies on the equity in a property owned by one of your family members to help you get a loan. This is known as a guarantor loan as the family member is guaranteeing your commitment to make the repayments.

Pricing / Discounts

CBA offers their basic home loan and professional package discounts for Family Equity structured loans. Each lender has their own discounts for guarantor loans and we recommend that you enquire online to speak to one of our brokers who can compare them in detail for you.

• 3 Year Special Rate Saver Home Loan (Basic Loan): Ideal if you are borrowing under $350,000 or if you want to keep your existing cheque account with another financial institution.
• Wealth Package / MAV Package (Professional Package): This loan is better suited to those of you who are borrowing over $350,000 and who want to get discounts on a range of bank products including cheque accounts, credit cards and insurance.

Lending Policy

CBA is less conservative than most lenders with their policy for guarantor supported home loans. The main issue that borrowers face when applying for a family equity loan is that approval of their application is based on a credit score.

What this means is that the bank assesses your credit, employment stability & asset position and assigns a score.You either pass or fail and there are very few indications beforehand as to if your application will succeed.

CBA may also require you to provide evidence of genuine savings. This is technically not in their policy, however people without savings tend to fail CBA’s credit score.

Home Loan Features

• 3 Year Special Rate Saver Home Loan
  • Redraw (fees apply)
  • No ongoing fees
  • Low variable rate (introductory rate for the first 3 years)
  • Internet banking
  • Interest only is available (no redraw is available on interest only loans)
• Wealth Package / MAV Package
  • Redraw
  • Annual fee is payable
  • Discounts on other bank products such as cheque accounts and credit cards
  • 100% offset account (limited transactions)
  • Low variable rate
  • Internet banking
  • Interest only is available

The guarantee can be limited with both loan types. CBA prefers to split the loan into two parts to allow one to be secured just on the new property being purchased while the other is secured by the family member’s property and the new property.

Disadvantages

The main disadvantages of the Family Equity loan offered by CBA are:

• Your application will be credit scored and as a result, people without savings are often declined.
• You must have a good asset position.
• CBA prefers not to deal with elderly guarantors using their home as security for the guarantee.
• Their professional package is not as competitive as other loans available.

If this may cause a problem for you then talk to us and we will show you what other guarantor loans are available from other lenders.

Find out more

Enquire online to talk to one of our mortgage brokers to see if the Family Equity loan is suitable for you. For most loans we charge no fees, offer the same loans available from the banks and can help you to protect the guarantor.