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Changes to guarantee loan requirements a double-edged sword

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Australian Broker | 24 Jan 2013, 08:00 AM Agree 0
One major bank has recently made it easier for first home buyers to secure guarantee loans - and the potential repercussions could land brokers into trouble
  • Coast Broker | 24 Jan 2013, 10:21 AM Agree 0
    I cannot see any issues with doing this type of Loan Structure aslong as you have a clear channel of discussion between all parties especially the Guarantors and you meet with them personally. Also Diary note all discussions with the Guarantors. I also structure the finance as 2 separate loans so the borrowers can focus on the smaller loan that is technically the amount secured by the Guarantors can be cleared quicker by the Borrowers. Never had an issue.
  • Mal Bartley BFA Finance Pty Ltd | 24 Jan 2013, 10:30 AM Agree 0
    Nothing says BEWARE !! more than a high income earner who has saved nothing!!. Always a reason but ultimately it gets back to saying to the guarantor are you prepared to lose your property offerred as security?
    When occassionally confronted with these transactions I prefer to suggest limiting the 3rd parties liability by raising the required shortfall as a stand alone transaction in the guarantors name. This way there can be little doubt as to their understanding of their liability. Also it confronts the "What if" situation and confirms the guarantors ability to carry the debt in need.
    Their injection of funds can and should be supported by a second mortgage behind the buyers mortgagee.
    This in turn discloses the involvement of a 3rd party and limits further borrowings which could affect the primary borrowers ability to reduce and repay the incurred "moral" debt of the 3rd party.
    I say "moral" because we all know they intend to pay at the outset but things can change, like that high income for the length of the loan!

    Disclosure, disclosure, disclosure and when the deal falls apart it will still be you the broker who is blamed!!!
    Got to love this industry!!
    Mal Bartley BFA Finance Pty Ltd
  • Rachael | 24 Jan 2013, 11:19 AM Agree 0
    Yep, separate split for the Guarantee portion always! Diarise all notes, and save emails outlining the implications. Even if you do it face to face too- always put it in writing and save it!

    Yes, always ask why no savings with high income, but there could be good reasons...
  • Ray-Perth | 24 Jan 2013, 03:41 PM Agree 0
    I was shocked when I saw the new ANZ policy. My first thought was that major lenders KNOW if these deals go wrong the lawyers for the Guarantors will attack the channel with least funds available to fight back, that's us THE BROKER.

    I don't care about any banks policy, any guarantee deal and I will be demanding a Solicitors Certificate to protect MY interests !!
  • Martin | 24 Jan 2013, 05:26 PM Agree 0
    I have never done a family guarantee loan where a solicitor's certificate was not required which has to add a little protection for the broker. Agree with all of the above though.
  • Khurram Zaidi -Perth | 25 Jan 2013, 01:53 AM Agree 0
    I Agree with Ray. Solicitor Certifiacte is a good idea to save our back.
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