going guarantor

Going Guarantor

going guarantor

In the world of BOMAD (the Bank of Mum and Dad), there will often come a question that should fill parents (and grandparents) with dread: Will you go guarantor for my loan?

A guarantor home loan is when someone, usually a close relative like a parent, offers up part of their home equity as security to top up the buyer’s cash deposit.

It means the buyer only needs a small deposit or sometimes none at all, and avoids paying costly lender’s mortgage insurance (LMI).

can you afford to be the bank of mum and dad

Can you afford to be the Bank of Mum and Dad?

can you afford to be the bank of mum and dad

As property prices enjoy a post-pandemic resurgence, an increasing number of first home buyers are being priced out of the market.

While a boon for homeowners, it’s a different story for those trying to get a foot onto the property ladder.

According to recent analysis, the Bank of Mum and Dad is now ranked as Australia’s ninth largest mortgage lender, lending adult children an average of $89,000 … lending that’s increased approximately 20% over the past 12-months.

bank of mum and dad bomad

The Bank of Mum and Dad (BOMAD). The pressure’s on.

bank of mum and dad bomad

It won’t have escaped your notice that there is increasing pressure in the first-home buyer space.

The youngsters cannot save enough – quickly enough – to keep ahead of the spiralling house prices.

They are under pressure.

And they sometimes pass that pressure onto their parents and grandparents, asking them to help them with the deposit.

huge-rise-in-bank-of-mum-and-dad-loans-be-careful-genders-and-partners

Huge rise in Bank of Mum and Dad loans – Be Careful!

huge-rise-in-bank-of-mum-and-dad-loans-be-careful-genders-and-partners

In 2021 Australia, experts are reporting that more than 60 per cent of first home buyers are relying on their parents to help buy their properties, with the average contribution rising to a record $93,000 – an increase of about 26 per cent in the past 12 months.

The Bank of Mum and Dad (aka BOMAD – a colloquial expression to describe parental lending) is estimated to have outstanding loans of about $35 billion, which makes it the nation’s ninth-largest mortgage lender – bigger than AMP, Citigroup and HSBC Australia, according to analysis by an independent market analyst.