Imagine you are a first home buyer who can’t afford a 20% deposit. There is good news, though, because now you can get help from the government and an individual to be your guarantor for a home loan. After reading this blog post, you’ll learn that you don’t need to save up to 20% because there are multiple government grants available for first home buyers, and one of them could pay for your entire home loan!
As a guarantor, you’re betting your bank balance that the person buying that home can actually afford it. But with safeguards in place and the right support, being a guarantor doesn’t have to be risky. Plus, with government grants available for first home buyers, there are products designed to make these loans more attractive than ever.
Pros Of The Home Deposit Guarantee
The home deposit guarantee is a government-backed loan that helps people buy a home. The buyer pays back the loan, but you’ll be responsible for any shortfall if they default on their mortgage repayments. There are many pros to home deposit guarantees, including:
- -No need to save up a deposit first
- A lower interest rate than other types of loans
- No credit checks
- You can help your family members buy their first home
These are the benefits of a home deposit guarantee when you purchase a new home for your family.
Who Can Be a Guarantor?
Anyone with an income can be a guarantor — even children or retirees. Usually, you’ll want someone who has good credit and a steady income. It’s also helpful if they’ve been working for several years at least, young people can be risky because they may change jobs easily. You may also want someone whose employment history is stable (such as with one company for many years) because that makes them less likely to leave their job quickly after signing on as a guarantor for your mortgage application (which could leave you without enough money to make your monthly payments).
Pros Of The Family Pledge
The main benefit of becoming a family guarantor is that it allows your child access to cheaper funds than they would have got if they had had to save up their own deposit first. For example, if they had saved up 10% of the purchase price in order to access 90% of the value of their home loan, they would be paying interest rates on the remaining 90%. If, instead, they could borrow 100% of the purchase price and only pay interest on 80%, then they would be saving 20% every year on their repayments! And as most lenders offer a discount for first home buyers who use guarantors (of around 0.25%), this means even greater savings for your child.
Your Responsibilities As A Guarantor
If you’re lending money to someone or guaranteeing their loan, it’s important that you understand what your responsibilities are and what could happen if they don’t pay back their debts on time.
You must make sure that they repay all amounts they owe within the agreed timeframe, regardless of whether they’ve defaulted on payments or not. If they don’t repay their debts in full and on time, then your contract will kick in, and you’ll be responsible for paying off the entire amount yourself – even if it means selling assets or taking out another loan to make up the difference.
Government Grants Available For First Home Buyers
Buying a home is the most important decision you’ll make in life. And, as we all know, it’s also one of the biggest expenses. But with a little help from the government, it can be done. There are government grants available for first home buyers and low-income earners who want to buy their own homes.
Homeownership grants are available from the state, territory, and commonwealth governments to help eligible first home buyers get their foot on the property ladder.
These government grants can be used to pay for some of the costs associated with buying your first house, including:
- moving costs
- legal fees
- stamp duty
- settlement costs (such as conveyancing).
These are different things that these types of loans can help pay for. They are used to help reduce the costs of purchasing a home for first-time homebuyers.
If you’re new to property investment, consider government grants available for first home buyers before signing on as a guarantor. There are multiple government grants available for first home buyers; one of them could pay for your entire home loan!