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Lenders ramping up bids for market share

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Australian Broker | 16 Jan 2013, 04:00 AM Agree 0
It's a difficult time for lenders aiming at a flagging mortgage market, so some are offering home loans covering up to 100% of the purchase price - but is it a smart option for borrowers?
  • Coast Broker | 16 Jan 2013, 08:57 AM Agree 0
    Really the first time in 3 years that 100% loans with a Family guarantee have been offered by lenders. Who writes these articles? Every broker knows that these products have been offered by most of the majors for years.
  • JohnW | 16 Jan 2013, 09:02 AM Agree 0
    Slow news day?
  • DC | 16 Jan 2013, 09:06 AM Agree 0
    Great attention grabbing headline. Pity the article doesn't really relate to the headline.
    Sounds like "Desperate publisher looking for content for on-line magazine"
  • Barney | 16 Jan 2013, 09:09 AM Agree 0
    What a ridiculous quote from Rate City. "a lot of things that can change... that (might) make it less affordable in the future". Really?
    Maybe people should never borrow money? This comments has nothing to do with borrowing 100% as it could be the same if you borrowed 10%. Obviously a borrower needs to make sure the loan is affordable in the first instance.
    Captain Obvious scores an own goal with this quote. Anything to get your name in the paper....
  • John from Geelong | 16 Jan 2013, 09:11 AM Agree 0
    What a meaningless, uninformed load of rubbish.
  • Country Broker | 16 Jan 2013, 09:12 AM Agree 0
    PLEASE check all the facts first these are family guarantee loans . If 100% loans become generally avaliable they need to be treated with absolute caution ,I doubt if the LMI'S would agree to them anyway, with the property markey doing waht it does .

    There are some target loans offering 100% to certain professions like Medical practitioners .
  • Patrick | 16 Jan 2013, 09:21 AM Agree 0
    Utter claptrap disguised as jouralism.
    Irrespective of the loan amount, it is not 100% if the bank takes additional security in the form of an additional mortgage over the parents' property. Even if the the parents' guarantee is limited the amount secured against the property purchased is no doubt just 80% of purchase price to avoid mortgage insurance. If the borrower can afford the loan at a qualifying interest rate (currently typically 8.00%) then this is a normal loan. In such circumstances I always recommend that the parents lodge a 2nd mortgage (or at least a caveat) over the property purchased to quarantine the equity in that property created by the additional security they provide from any unsecured creditors in the event that their children experience financial misadventure.
  • GB | 16 Jan 2013, 09:46 AM Agree 0
    The Dood Frank act in the US will see "100%" and "interest only" loans banned. the sooner this happens here in Australia the better. It is "Ponzi" finance pure and simple and should be outlawed...
  • Jim S | 16 Jan 2013, 10:08 AM Agree 0
    Poor article, but then some of the responses are equally inaccurate.

    Many lenders have been offering family guarantee loans for years. I have personally written them with many different lenders.

    Some lenders will advance 100% of the purchase price with the collateral security provided by the guarantee. In fact, some will also lend more than this to cover stamp duty and other costs, even debt consolidation in some cases.

    These loans are appropriate where the borrowers have very good debt serviceability but little or no savings. Perhaps they are young with little savings but great earning potential. The relationship with the guarantor should be rock solid and the guarantor should be able to understand and financially cope with the possibility of things going wrong.

    The borrowers must have life insurance, loan protection Etc for at least the amount of the guarantee just in case.

    It can be a fantastic way for parents to help their kids get into home ownership earlier than they may have been able otherwise.

    Ps interest only loans will never be banned here, what a load of nonsense. They are entirely appropriate in the right circumstances.
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