How To Choose A Loan?

When choosing a home loan, the rates, fees and features of the loan are the most significant aspects that you should look at.

However, seeking a guarantor loan that is supported by a family guarantee, can be a far more involved process and requires further consideration.

So what is it you should you look for? What terms and conditions are most important? We’ve created this guide to help you choose the best loan for your situation.

Step 1: Who will approve your loan?

There isn’t much point finding the best loan on the market if your application ends up being declined!

Did you know that many lenders do not accept:

  • Guarantors that are pensioners.
  • Guarantors that already have a loan on their property.
  • Borrowers that have no savings (some lenders require evidence of savings, even for guarantor loans).
  • Borrowers that have a low asset position or several unsecured debts such as credit cards or personal loans.
  • Borrowers that are buying an investment property instead of a home to live in.

However, not all lenders have such strict criteria! If you think you might have difficulty getting approval for a guarantor loan, please enquire online or call us on 1300 399 056 and one of our mortgage brokers can determine which lenders you qualify with.

Step 2: Who has the best guarantee conditions?

Before entering into the loan contract, it is necessary that any prospective guarantor ascertain exactly what is required of them under the agreement.

This means finding out whether the guarantee is limited and what the restrictions are on releasing the guarantee.

Most banks will release the guarantee when you have enough equity in your property.

Some lenders will allow you to remove the guarantee when you owe 90% or less of the property value (Lenders Mortgage Insurance (LMI) may apply for loans over 80% LVR).

This way, the guarantee can be removed earlier, reducing the guarantors risk.

There may also be other conditions applicable if you wish to increase the loan amount. Remember that the guarantor has an obligation to cover all debt, future or present.

Therefore, if you decide to increase your loan amount, the guarantor will be liable for those additional funds.

To find out which lender offers the best loan conditions, please speak to us on 1300 399 056 or enquire online and one of our mortgage brokers will contact you to discuss your situation.

Step 3: Who has the lowest rate & fees?

Choosing a suitable loan is a matter of weighing up the interest rate, fees, terms and conditions and the features of the loan.

Some banks have low interest rates and no fees upfront for guarantor loans.

Our loan selection software can weigh up all three areas of the loan and compare the cost over 30 years, automatically giving you a short list of appropriate lenders.

Save time and stress by finding out which bank offers the most competitive guarantor loan package.

Other considerations

When choosing a guarantor loan it is also important to consider if there are any extra costs associated with the transaction.

This may include a valuation for the guarantors home and the costs of releasing the guarantee.

Some banks stipulate that the borrower must refinance their home loan upon release of the guarantor. Accordingly, you may have to pay both application fees and stamp duty.

Remember that not every lender has these costs. Some of them will waive the application fee!

Contact a mortgage broker

Looking for a guarantor loan? Please enquire online or contact us on 1300 399 056 to speak to a mortgage broker that specialises in family guarantee lending.

We’ll use our expertise to find you the best loan with the most competitive features, flexible conditions and low rates and fees. We can also help you limit the risk to your guarantor. Call us on 1300 399 056 today!