Family Pledge

Family Pledge - Intech Credit Union

Buying a home can be a difficult process. There’s the stress of finding the home but also the stress of
saving enough money for a deposit and the high cost of Lenders’ Mortgage Insurance.

Intech Credit Union’s Family Pledge loan is your solution to owning your home sooner.

What is a Family Pledge loan?
Intech’s Family Pledge home loan allows people who do not have a deposit or sufficient savings to purchase a property with the support of a family member.

Applicants can borrow up to 110% of their new property’s value – to help with up-front expenses like stamp duty and legal fees. The loan is secured by both the property that is being purchased and the property owned by a family member, who will act as a guarantor for a portion of the loan.

How does a Family Pledge/guarantee work?
A family member who has sufficient equity in their home or investment property can guarantee a portion of the value of their property against a loan held by their child(ren). The guarantee will be limited to the portion of the loan exceeding 80% of the borrower’s new property value and the total amount of the guarantee is not to exceed 50% of the guarantor’s property value. A guarantor must obtain independent legal advice and may seek financial advice.

The maximum loan can be up to 110% of the purchase price. The applicant(s) must be able to demonstrate capacity to afford the full loan amount on a Principal and Interest (P&I) basis on their own (guarantees are for security purposes, not servicing purposes).

What is the maximum amount the Family Pledge/loan can cover?
The maximum commitment secured by the family member’s real estate assets is not to exceed 50% of their property’s value.

How is the loan structured?
Initially the loan is split between a P&I and Interest Only. The P&I portion is the guaranteed component and is paid off more quickly so that the guarantee may be released. Interest only payments on the non-guaranteed loan means the guaranteed loan is repaid as fast as possible. Once the guaranteed loan is paid off, the interest only loan can be restructured.

What are the benefits?
The Family Pledge loan allows the borrower to:
  • borrow up to 110% of the purchase price to assist with set-up expenses (stamp duty or legal fees).
  • structure the loan to accelerate the reduction of the guarantor’s liability.
  • save paying Lenders Mortgage Insurance (LMI) premiums.
  • save paying extra fees for this option - standard guarantee and legal fees apply.
  • guarantees may be released (conditions apply) when the Loan To Value Ratio (LVR) reaches 80% of the value of the purchased property.

Who can be a guarantor?
Guarantors are restricted to immediate family e.g. parent(s), grandparent(s), siblings or close relatives. All guarantees are limited to the required level of assistance and must be supported by a registered first mortgage over an established dwelling.

Click here for more information on Family Pledge.

Products issued by Intech Credit Union Ltd ABN: 70 087 650 191. AFSL & Australian Credit Licence 236779. Terms and conditions, fees and charges and lending criteria apply.