Guarantor on Home Loan

[omiinvestor]

Hi Everyone,

Not sure if anyone can help. We are having 'sevicing' issues with our existing loan. We are wanting to refinance to another lender and wanting to borrow additional money for renovations. Our existing loan is with HSBC. We were wanting to add our daughter onto the loan to assist with servicing but a lot of lenders seem to want her to be on the title and we do not want to do this as we would need to pay stamp duty and the property is worth $1.5mil.

Are there any lenders that would be able to assist?

Lilian

 

[jrc77]

Why don't you speak to a mortgage broker who will have a better idea of the servicing models at different lenders?

Regards,

Jason

 

[Aaron_C]

The majors all have a strict no guarantor policy for servicing except for company/director guarantees and/or spousal loan applications.

 

[omiinvestor]

We don't have a mortgage broker as we usually deal with the lending manager at HSBC and NAB but I guess its time to deal with one.

 

[Rolf Latham]

Hi Everyone,

Not sure if anyone can help. We are having 'sevicing' issues with our existing loan. We are wanting to refinance to another lender and wanting to borrow additional money for renovations. Our existing loan is with HSBC. We were wanting to add our daughter onto the loan to assist with servicing but a lot of lenders seem to want her to be on the title and we do not want to do this as we would need to pay stamp duty and the property is worth $1.5mil.

Are there any lenders that would be able to assist?

Lilian

Under the NCCP its a bit dodgy to have a servicing guarantor, without them having a beneficial interest in the property, hence lenders will no longer touch them!

HSBC serviceability is middle of the road, so id expect you may be able to find a lender that will do this just on your incomes

ta
rolf


HSBC serviceability is ok, but id exp

 

[omiinvestor]

Hi Rolf,

She does live with me - does that make a difference?

 

[Mick C]

Guarantor loan these days only allow it too be a "Security"/deposit Guarantee- True serviceability Guarantor loans don't really exist anymore for residential lending.

Having your daughter living at home is not a reason for her to have a "financial gain" from this Guarantor loan...she needs to be on the loan for serviceability Guarantee.

Your best option is to find a broker and get them to find out your max borrowing capacity from different lenders OR if they have any another creative solution.

Regards
Michael

 

[omiinvestor]

Hi Michael,

She is happy to be on the loan as an applicant but we are finding that lenders want her to also be on the title?

Regards

Lilian

 

[S.T]

Charge your daughter rent (if not already) that may help with serviceability.

 

[Mick C]

She is happy to be on the loan as an applicant but we are finding that lenders want her to also be on the title?

Lenders won't allow a 3rd party on a loan doc UNLESS they have some financial interest ie they are on the title. The only exception is spousal relationship and directors.

To be honest, i know you reallllyyyy want to add your daughter on as Guarantor to help with serviceability, but at the same time the cost to add her on will cost you an hand and a leg, with the stamp duty. End of the day- it's a no go.

Consider a different bank and restructure.
if you had your loan with HSBC for 4-8 years...- it helps to refinance out and restructure BACK to 30 years on P/I, this will improve serviceability dramatically.

Going for a fixed rate also helps slightly with certain bank's serviceability, not a great deal...but it might be the final push over the line.


Regards
Michael

Charge your daughter rent (if not already) that may help with serviceability.

Not acceptable form of income.

 

[Aaron_C]

She is happy to be on the loan as an applicant but we are finding that lenders want her to also be on the title?

It's all because of NCCP but perhaps there is a servicing thing that can be bypassed that you are not aware of as of yet.

 

[Rolf Latham]

Hi Rolf,

She does live with me - does that make a difference?

not unless she has a derived benefit like a spouse

ta

rolf

 

[Williamyuan]

Not acceptable form of income.[/QUOTE]

No banks will accept subletting income?
Is only main employment income accepted? What about second jobs?

 

[Terry_w]

It will be unlikely you will find a lender because of the risks involved. There is a rebuttable presumption of undue influence of a parent and child entering into a contract together - which could be solved by independent legal and financial advice.

 

[savoys]

It will be unlikely you will find a lender because of the risks involved. There is a rebuttable presumption of undue influence of a parent and child entering into a contract together - which could be solved by independent legal and financial advice.

Terry, that is good to hear that the child should have independant advice. Being guarantor could cause a problem for a child further down the track, could he/ she be responsible for the whole debt if something happened?

 

[Mick C]

Not acceptable form of income.

No banks will accept subletting income?
Is only main employment income accepted? What about second jobs?[/QUOTE]

2nd job is ok, subletting is also ok as long as there is a formal agreement and it's declared for tax reasons etc.....but "daughter" renting off parents can be a bit suss ...esp if it's the "deciding income" for approval.


Regards
Michael

 

[Mick C]

Terry, that is good to hear that the child should have independant advice. Being guarantor could cause a problem for a child further down the track, could he/ she be responsible for the whole debt if something happened?

All if not most residential guarantor loans requires the guarantor to seek written independent advice.

 

[Terry_w]

Terry, that is good to hear that the child should have independant advice. Being guarantor could cause a problem for a child further down the track, could he/ she be responsible for the whole debt if something happened?

Yes, if the parents don't or can't pay it will be left up to the guarantor to pay the loan.

 

[Aaron_C]

Yes, if the parents don't or can't pay it will be left up to the guarantor to pay the loan.

True but in most cases due to the low LVR with these deals the risk of the guarantor having to come up with any money in the event of a default are slim.

 

[Williamyuan]

No banks will accept subletting income?
Is only main employment income accepted? What about second jobs?

2nd job is ok, subletting is also ok as long as there is a formal agreement and it's declared for tax reasons etc.....but "daughter" renting off parents can be a bit suss ...esp if it's the "deciding income" for approval.


Regards
Michael[/QUOTE]

The bank would contact the tax office to check about sub-letting being declared for tax, or just request letter from accountant?