Family Equity products are a popular alternative for borrowers with no or low deposit. Also known as Family Pledge or Family Guarantee, these products allow family members (generally the borrowers’ parents) to provide a guarantee by using their home equity as security for the loan. Family equity guarantees can also be provided in the form of an income/loan serviceability guarantee.
Who should consider Family Equity Products?
Family equity guarantees can be complex finance products and require all parties concerned to be aware of their financial & legal obligations. For example, it may be beneficial to look at splitting the loan to limit the parent’s equity guarantee exposure, by establishing an interest-only portion on the larger loan, with a view of having the parents’ security released as quickly as possible.
At WeLend we can assist you in choosing the most suitable family equity loan option and loan structure.