Lenders like Mortgage Street continually balance financing consumer purchases and risk. Ideally, each applicant provides full documentation of their income, references, and a stellar credit score. When it’s not possible, alternative financing options exist such as the family pledge home loan.
There are several reasons why an individual cannot afford an entire mortgage monthly repayment on their own. Young applicants with little to no employment history are common. These applicants pose a higher risk. Some applicants have family members who are willing to put their home as collateral to guarantee the new mortgage. The family pledge loan helps the individual become a homeowner.
Additionally, they might not face the lender’s mortgage insurance charge. This loan requires no extra fees. The total borrowing amount goes up to 100% and covers the stamp duty and legal fees.
Brokers should be aware that downsides to this loan exist, but they fall on the guarantor instead of the borrower. If the applicant falls behind on their monthly repayments or fails to continue paying the loan at all, it puts the guarantor’s home at risk.
Home loans backed by a family’s pledge finance all owner-occupiers. A first-time buyer interested in purchasing an investment property is covered, too. The guarantor must be directly related to the applicant including siblings, parents, or children. Grandparents qualify as a guarantor as well.
Fixed-rate and variable loans are offered under the family pledge umbrella. Once an applicant goes through the processing stage, the applicant finds out their possible loan terms and other important information.
Family Pledge Conclusion
Brokers come across several clients and different financial circumstances. Today, there are more financial products on the market. Mortgage Street is a non-bank lender. We have the freedom to provide innovative and forward-thinking financing such as the family pledge home loan. For more information, give us a call.