Guarantor loan
Because most lenders will not release funds for transportable homes, prefabricated homes, factory built homes, removal homes and relocated homes prior to the completion of the house many people have been unable to take advantage of the unique benefits of these methods of construction.
By using a guarantor you can borrow the full cost of the land as well as any construction costs and have the funds released before the property is complete! Best of all it is usually at normal home loan rates!
How does it work?
The borrower obtains a loan using both their land and the guarantor's house as security. The amount of the guarantee can be limited to reduce the risk to the guarantor. Funds can be released prior to the house being complete and on site. If you choose you can apply to remove the guarantee when the house is complete subject to the lenders approval.
Who this loan is for?
Owner occupiers, investors, purchases, refinances, construction. All types of transportable homes are usually acceptable including removal homes or second hand dwellings being relocated.
Who this loan is not for?
Low doc & pensioners using their home for the guarantee. Pensioners using an investment property or people who are not pensioners using their own home are acceptable.
Type of lender
Bank.
Type of loan
Typically this loan is available with both basic and professional pack discounts.
Maximum loan amount:
$1,000,000
Maximum % of property value (LVR):
80% of the total value of the land plus the guarantors property less any loan owing on the guarantors property. This amount can be more than 100% of the total cost of the land plus all construction costs.
Maximum loan term
30 years.
Frequency of payments
Weekly, fortnightly or monthly.
Interest only option
Available, maximum of five years. Interest only payments must be made monthly.
Redraw
Yes, a fee may apply.
Fixed rate option
Yes, up to 5 years available. Note that we recommend you should only fix part of your loan so that you can redraw the progress payments as you need them from the variable portion.
100% offset account
Available on some loans.
Lender Mortgage Insurance (LMI)
Not applicable for guarantor loans. If you request the lender to remove the guarantee once the house is complete they will revalue the property and subject to approval may ask you to pay an LMI premium if the loan amount is greater than 80% of the property value.
Removing the guarantee
The lender will not automatically remove the guarantee. The guarantee is only removed at the request of the borrower. The loan is reassessed and if it meets the lender guidelines then the guarantee can be removed. Primarily your repayments must have been on time, the house must be complete and deemed to be a permanent structure by the bank's valuer. The lender reserves the right not to remove the guarantee should the loan not meet their guidelines.
Legal Advice
We strongly recommend that all guarantors obtain independent legal advice before entering into a guarantor arrangement. Some lenders may require this as a condition of the loan.
Notes
The details above are for the most commonly used guarantor loans from one of our lenders. The details of your loan may differ slightly, please refer to your loan offer for the full & correct details of your loan. The loan may take up to six weeks to be advanced if your situation is complex so please apply for the loan well in advance of entering into a building contract or agreement to purchase a removal home.
Where to from here?
- Take a look at our Frequently Asked Questions (FAQ).
- See if you meet our Lender Guidelines.
- Read about our popular equity loans.
- Send us your full details to get an obligation free quote.
- Download our Transportable Home Finance brochure.
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