What Is a Guarantor Home Loan?
The guarantor doesn’t provide any cash but instead uses the equity in their own home to back the borrower’s loan. This arrangement can help borrowers secure a home loan with a smaller deposit and avoid Lenders Mortgage Insurance (LMI), which is usually required when the borrower has less than a 20% deposit.
Guarantor home loans are a good option for those who struggle to meet standard lending criteria, such as young buyers or those with limited savings. At Smartfinn Advisors, we help borrowers navigate the guarantor loan process, ensuring that both the borrower and the guarantor understand their responsibilities and can achieve favourable loan terms.
Benefits of a Guarantor Home Loan
Guarantor home loans offer several advantages that can make the home-buying process easier and more accessible, especially for first-time buyers.
Avoid or Reduce Lender’s Mortgage Insurance (LMI)
One of the biggest advantages of a guarantor loan is that it can help borrowers avoid LMI, which can cost thousands of dollars. LMI is typically required when a borrower has less than a 20% deposit, but a guarantor’s security can negate the need for this insurance.
