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Most lenders will lend up to 95% of property valuation where a single property is offered as security for the loan, provided the property is assessed as being a suitable security. Some lenders will also add most of the Mortgage Insurance premium to the loan amount, provided the total loan amount does not exceed 97% of valuation. Refer "Lending Updates" link. |
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Several banks will lend 100% of the purchase price where another property, usually the parental family home, is available as additional security for the loan.
Example: if the purchase price is $400,000 a 100% loan can be structured as follows:
$320,000 (80%) loan in the purchaser’s name secured by the new property
$80,000 (20%) loan in the purchaser’s name secured by the parents’ property
Parents are required to sign normal mortgage documents as well as a property guarantee limited to the amount of $80,000.
Important points to consider with these loans include:
- solid income proof and employment history are required
- parents must be willing participants and receive independent legal advice before signing documents
- NO MORTGAGE INSURANCE is payable, saving about $10,000 in the above example
- when the total loan balance reduces to 80% of the purchased property value, the parental guarantee and mortgage over their home can both be terminated
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