Australian Finance Centre - Home Loan and mortgage broker

The Family Pledge Mortgage

• Family members with Equity in their own property, help another family member, by providing a limited guarantee to the lender on behalf of the family member.

The family pledge is a way for your parents or family to help purchase a home without them actually providing cash for a deposit. In contrast, your family use their own homes equity to provide security for a portion of your loan amount, which, reduces your loan to value ratio and also saving you large amounts of money on Lenders Mortgage Insurance (LMI). 

How the Family Pledge Loan works

Example 1: Sam and Terri want to assist their daughter Grace to buy her first investment property. As a graphic designer, Grace services the mortgage and also has 10% deposit while Sam and Terri allow Grace to use one of their investment properties as security for the additional 10% plus the costs to purchase Grace's first property.

Example 2: Russel and Rhiana have just graduated from university, Russel as a qualified Scientific Researcher and Rhiana in Public Relations. Both applicants have secured their first jobs in industry and starting at the bottom of the ladder, with strong employment prospects and stable future Russel's parents have decided to let Russel and Rhiana use 20% of their property to attain an approval for the couples first home.

Example 3: Damien is in his mid 40's and separated from his wife and moved out of the family home. Although he is earning sufficient income, he does not have any funds for a deposit and his parents are using 20% of their property plus the costs to support his son to purchase a new home.

With a 79% 'loan to value ratio, lenders mortgage insurance is avoided, savings valuable money to the client.

Benefits Include: 

• Helps people with no deposit into their own home;
• Helps people even if they have had credit problems;
• Can avoid mortgage insurance and could save you “thousands”;
• Family member does not need to change from their bank or 2nd Mortgage;
• Family member can request the guarantee be removed anytime;
• No high interest rates, or exit fees.

If you would more information on the family pledge loan, please do not hesitate to contact Australian Finance Centre.