Planning to buy a home but lack the deposit required? A guarantor home loan could help you enter the property market sooner.
Our guarantor loan calculator is a simple and powerful tool designed to estimate your required deposit, calculate the limited guarantee amount, and provide insight into whether your guarantor can support your loan application.
Who can be a guarantor on a home loan?
A guarantor home loan allows a family member to use the equity in their own property as security for a part of your loan. This can help you purchase your dream home with a smaller deposit while avoiding the Lenders Mortgage Insurance (LMI) and increasing your borrowing capacity.
Please note that a guarantor does not provide cash; instead, they offer a limited guarantee secured against the property.
Before you use the calculator, it’s important to understand who is eligible to act as a guarantor. Typically, a guarantor must be a close family member, most commonly parents; in some cases, siblings may also be accepted. They should have sufficient equity in their property and be financially stable and able to meet lender requirements.
How Does the Guarantor Loan Calculator Work?
First off, enter the following details:
Property purchase price
Loan amount you intend to borrow
Guarantor’s property value
Gurantor’s existing loan balance
Then you will be provided with your deposit amount, the loan-to-value ratio on your purchase, the required guarantee amount calculated as the shortfall between your loan and 80% of the property value, and lastly, the guarantors’ available equity.
You’ll further see a detailed view of your guarantor’s financial position, including property value, existing loan balance, usable equity and maximum guarantee capacity, which is typically up to 80% LVR.
The calculator brings everything together to provide a clear summary, including the limited guarantee size required, the LVR on your property purchase and the guarantor’s property and finally the total debt against the guarantor’s property.
Most importantly, the calculator highlights whether your guarantor is likely to support your loan application or not, giving you clarity before approaching a lender.
