Aussie couple dodge $40,000 fee with $150,000 mortgage move: ‘Going to see a lot more’
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Aussie couple’s $150,000 mortgage move in growing Bank of Mum and Dad trend: ‘Going to see a lot more’
Chelsea Anderson and her partner Jaimyn Wiki got a guarantor home loan to purchase a four-bedroom townhouse in Brisbane in March. Wiki’s parents are guaranteeing about $150,000 of the property purchase by putting up their own home as equity. This has given the couple 20 per cent security needed to buy the home without paying LMI. The couple bought the home as an investment property and hope to remove the parents from the loan within the next two years.mortgage brokers have reported seeing a rise in guarantor loans among first-home buyers, with Loan Market data finding they now make up 66 per cent of loans written in their network.
More Australians are turning to the Bank of Mum and Dad to get a foot on the property ladder as prices continue to skyrocket. But instead of giving cash, some parents are putting up part of their home equity to help their kids get into the market quicker and avoid mortgage insurance fees.
Chelsea Anderson and her partner Jaimyn Wiki purchased a four-bedroom townhouse in Brisbane in March using a guarantor home loan. The 27-year-old real estate agent told Yahoo Finance the parental help meant the couple could buy the $925,000 property with a 5 per cent deposit.
“We went down the guarantor route so we wouldn’t have to pay LMI [Lenders Mortgage Insurance]. We saved ourselves about $40,000 in cash,” Anderson said.
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Wiki’s parents are guaranteeing about $150,000 of the property purchase by putting up their own home as equity. This has given the couple 20 per cent security needed to buy the home without paying LMI.
The couple bought the home as an investment property and hope to remove the parents as guarantors from the loan within the next two years.
They bought their first property, a two-bedroom unit for $535,000, in August last year and used the first home guarantee to buy with a 5 per cent deposit.
The couple are hoping to get Wiki’s parents off the loan within two years. · Source: Supplied
“I would say it’s probably gone up about $100,000 in value since then,” Anderson said.
Anderson said the couple were keen to expand their portfolio, and Wiki’s parents had previously offered to help them.
“We could feel the market is going to increase and keep growing in Brisbane and we had a deposit to be able to buy another property, so we wanted to leverage on the growth before the rates start dropping more and prices keep going up,” she said.
Guarantor loans set to become more popular
Mortgage brokers have reported seeing a rise in guarantor loans among first-home buyers, with Loan Market data finding they now make up 66 per cent of loans written in their network.
That’s up from 50 per cent for the same month last year and 38 per cent four years ago during the pandemic.
Loan Market broker Caleb Bax said he expects guarantor loans would continue to increase in popularity. That’s partly because more parents will now be in a position to help, as their own home values skyrocket.
Mortgage broker Caleb Bax said he expected guarantor home loans will keep increasing in popularity. · Source: Supplied
“There are a lot more people who are in a position to help,” he told Yahoo Finance. “Obviously, current house prices seem to keep going up, so it’s just making it harder and harder for first-home buyers.