Be nice to your parents.
If you can't save a deposit to get a mortgage or home loan by yourself, maybe your parents, a relative or friend can help with a gift, loan, or home loan guarantee. This could also save you money in lenders mortgage insurance premiums.
Financial help with home loans – parental gifts
Obviously, the best kind of loan is one you don't have to pay back. If someone is willing to give you money to help you buy a home – and doesn't expect it to be repaid – you're very fortunate. But make sure you get it documented. Otherwise your lender will consider it a loan that has to be repaid and therefore you will have a liability to repay that loan back as well and this will impact on your borrowing capacity.
Financial help with home loans – parental loans
Your parents might be able to help you with a deposit for a home loan – but they probably want it repaid. Bad luck. Still, this could be a big help, particularly if they are offering the money at a favourable interest rate. Again, you should have the parental loan documented because your lender will want to know the details in order to calaculate your borrowing capacity.
Financial help with home loans – parental guarantees
Your parents mightn't have any spare cash, but they might be able to help you by going guarantor on your loan. For example, most parents have equity built up in their own home that a lender would consider as security – if your parents were agreeable. However, your parents should be aware that going guarantor on your loan will affect their borrowing capacity, and possibly their retirement lifestyle. To learn more about parental loans and guarantees contact CBM Mortgages today.