Products

Family Support (Guarantors Support)

Description

Family Support is a home buying solution unlike any other. It's a range of financing options that can help customers secure a home loan, repay a home loan or a combination of both. The central idea is that both borrowers and their families help secure and fund the loan and/or repayments, together.

Family Support is available to assist first home buyers or investors to enter the property market.

Family Support utilises the Bank's guarantors support policy to help customers secure/ repay a home loan (or a combination of both) when they are unable to provide:

Sufficient income to service the loan repayments at the time of application.
Adequate security in cases where the loan amount exceeds the value of the property.
a combination of both.

Family Support utilises the policy and procedures for the Guarantor's Support Policy, such as:

Guarantors providing security and support
Guarantors providing servicing support; and
Guarantors providing security and servicing support.

Options

The following options ar available:

Security support only where the guarantor generally provides collateral security to satisfy the security and loan documentation test.

Example:

Miss A is seeking to borrow $300,000 to purchase a property valued at $285,000. The LVR for this example calculated at 105% is outside of acceptable security limits. In order to help Miss A obtain her loan, Mr and Mrs Y have agreed to allow the Bank to take a mortgage over their property and provide a supported guarantee. the guarantee provided is for the total amount of Miss A's loan.

Servicing support only where the guarantor agrees to assist the borrower to satisfy the income repayment capacity test.

Example:

Mr B is seeking to borrow $300,000 to purchase a property valued at $400,000. The LVR for this example calculated at 75% is within acceptable security limits however based on Mr B's current income and repayment commitments, he cannot service a $300,000 loan. In order to help Mr B obtain his loan, Ms Z has agreed to act as an unsupported guarantor and provide servicing support. Servicing capacity was assessed using both Mr B's and Ms Z's income and repayment commitments allowing Mr B to borrow the $300,000 required. The guarantee provided is for the total amount of Mr B's loan.

Security and servicing support where the guarantor agrees to assist the borrower with both security and servicing.

Example:

Mr C and Miss D wish to borrow $300,000 to purchase a property valued at $285,000. The LVR for this example calculated at 105% is outside of acceptable security limits and based on both of the customers' current income and repayment commitments, they cannot service a $300,000 loan. In order to help them obtain their loan, Mr C's parent agree to act as supported guarantors and provide both servicing and security support. The guarantee provided is for the total amount of the loan. Servicing capacity was assessed using Mr C, Miss D and mr C's parents income and repayment commitments allowing the customers to borrow the $300,000 required.

Benefits

Family Support enables customers (in particular first home buyers) to:

Borrow more funds that they may have been eligible for.
Purchase the property they want rather than having to settle for a cheaper alternative.
Enjoy a sense of independence and financial security having purchased their own property.
Family member can assist without necessarily taking on extra financial commitments (eg in the case of security support only).

Eligibility

if the guarantors are providing...	Then...

Security Support Only	there is no restriction on the relationship between the borrowers and guarantors

Servicing Support Only	there is no restriction on the relationship between the borrowers and guarantors except where the reliance on the guarantor for servicing is >50%, or in the case of expanded purposes, where the guarantor is restricted to immediate family.

Security and Servicing Support	guarantors are restricted to immediate family* * Immediate family is defined as a: spouse (including de-facto spouse and former spouse/ de-facto spouse) child (including adult children, adopted children, step- children or an ex-nuptial child) parent grandparent grandchild sibling aunt or uncle who are siblings of parents legally appointed guardian

Guarantor Checklist

All borrowers and guarantors must be interviewed personally (face to face not via the telephone) and you must consider the following aspects as part of the interviewing process and to determine if independent legal advice is required:

(a) Do the borrower/ guarantor understand and are they literate in English?

(b) Can the guarantor understand their role as guarantor? Have they

previously acted a guarantor
has the guarantor previously had a mortgage?

the guarantor is acting under pressure and is uncomfortable with the proposal?
that by acting as a guarantor they may be placed under financial strain?

(d) Have you advised the guarantor that:

they are guaranteeing the total loan amount.
they can limit their support by applying for a separate loan.
in the cases of servicing support and security and servicing support they will be required to make regular loan repayments.

Draft Forms of Agreement

Draft Forms of Agreement are an option available to approved Family Support customers.

Agreements are restricted to arrangements where immediate family are involved and they can be adapted by family members and their legal representatives to reflect their individual repayment arrangements (e.g. a share of a capital gain on the property being purchased, a lump sum payment, set repayments or repayments of interest and/or principal etc.)

Note: The Bank does not require a customer to enter into a Draft Form of Agreement, nor does it require notification if an agreement has been entered into. The exception to this is where the borrower s to make repayments to the family member from the outset. This must be taken into account when determining servicing of the loan.

Loan options

Customers can choose any Home Loan, Investment Home Loan or Line of Credit product under a family support arrangement (Low Documentation Loans, Equity Unlock for Seniors and 'Off the Plan' Loans are excluded).

Lenders Mortgage Insurance (LMI)

LMI is available for security support only where LVR >80% and borrowers / guarantors are:

husband and wife
company directors

Loan Documentation

Whilst the loan is marked as "Family Support" or "Family Support Home Loan" , the Bank's offer documents will show the name of the loan as the name of the product selected (e.g. 1 year Guaranteed Rate Home Loan, Standard Variable Rate Investment Home Loan).

Interest Rates

Standard Home Loan, Investment Home Loan, Line of Credit interest rates apply.

Fees

Standard Fees and Charges apply to Family Support Loans.

Please note that there is no delegation to waive establishment fees for loans under Family Support arrangements involving guarantors, except for MAV customers.

Fact Sheet