ANZ On Family Guarantee Bandwagon

Saving for your first home? The cost of buying a house adds up to much more than the value of the house itself. There’s stamp duty, legal fees, taxes, insurance, estate agent fees and more to take into consideration. If you need a helping hand to get on the property ladder, you may like to weigh up the benefits and risks of a product like ANZ Family Guarantee.

Your family members could help you out with your first home by allowing you to borrow against the equity in your family home. The Family Guarantee option can be used for a range of ANZ home loan products.

So how does ANZ Family Guarantee work? Basically, you borrow against the value of your family member’s home as security for a portion of your loan amount, and this can eliminate the need to cover the additional cost of Lenders Mortgage Insurance (LMI) which means you could borrow more.

Lenders Mortgage Insurance (LMI) is required when you borrow more than 80% of the value of your property, and is designed to protect the bank if you fail to make any of your repayments. LMI does not protect you as a borrower, for this you would need a specialised type of income protection insurance. With ANZ loans, where LMI is required, a one-off premium needs to be paid which could add significantly to the overall cost of the loan.

Using ANZ Family Guarantee can maximise the amount you can borrow and reduce the need for a deposit, plus cover costs such as stamp duty and other legal fees.

ANZ Family Guarantee is available to eligible borrowers who have a parent, parent-in-law, step-parent, grandparent or sibling who is willing to use their property as security for your loan.

Guarantors can determine what portion of the loan they will secure (they don’t have to provide a guarantee covering 100% of your loan amount). Unlike some similar products, ANZ allows your family members to nominate the amount of security they would like to offer (subject to the bank’s approval), rather than having to act as provide security for the entire amount of your loan.

There are risks associated with having your family act as guarantors, with a facility such as ANZ Family Guarantee. For example, if you can’t make any one of your repayments, your family member's home may be put at risk. So you should be sure that you can comfortably make your loan repayments before your family put their own financial security on the line.
When exploring your home loan options, be sure to discuss your financial situation with a financial broker who can help you to find the right home loan product for you.

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