What options are available?

Option

  First Home Buyer   

  Other purchaser   

Up to $50,000 Cash Out for home renovations

Yes

No

Debt Consolidation up to 5% of purchase price

Yes

Yes

Refinance of existing external Family Guarantee structure
(no increase to loan levels or guarantor exposure)

Yes

Yes

Do customers have to be First Home Buyers?

Customers do not have to be First Home Buyers to use the Family Guarantee structure, including the consolidation of small debts.  Customers do have to be First Home Buyers of an owner occupied property for the Cash Out option for home renovations.

What needs to be considered if the guarantor wants to provide their owner occupied property as security for the guarantee?

Heritage must, in all cases, ensure that we are not placing the guarantor/s into a potential position of hardship. In effect this will mean that the guarantor/s must have the ability to meet any such loan ‘call up’ from means other than the sale of their owner occupied house. This could include the availability of other investments, or an ability to service the secondary loan from their income.

If security property offered by guarantor is currently mortgaged to Heritage, does it matter if there are currently already 2 mortgages to Heritage?

No, as long as there is sufficient equity in the property, it does not matter how many Heritage mortgages are already lodged, ie 3RM against Heritage security is acceptable.

Is the guarantee automatically released when the LVR becomes acceptable?

No, at time of closure/payout of the Secondary Loan the guarantee/s and the mortgage/s over the guarantor/s property will be released upon request by the Guarantor/s. To apply to have the guarantee released earlier, please contact your BDM. This will only be available if a valuation is obtained at customer/s cost confirming sufficient equity is held, and will be subject to normal approval process for a release.

Can Family Guarantee structure be used for land purchase at 100% plus costs, and then when build contract is ready, further advances applied for at 100% plus costs for build?

Yes, providing that the normal family guarantee LVR's are maintained. As Equity Cash Out portion is for home renovations, this would not be available for the land application.

Can siblings offer their property as a guarantee?

Yes. If you have a family relationship outside of immediate family, please contact your BDM with your justification for consideration.

With regard to showing capacity/ability to repay of the borrower's, (in the absence of genuine savings), how do I do this?

Lenders should demonstrate borrowers’ ability to service the loan through satisfactory conduct of previous/existing (ceasing) commitments (eg rental, previously held loans, etc), or other means.

Can customer use $50,000 Cash Out to complete construction?

As customer is already able to borrow 100% plus costs, the contract should already be included. If additional work is requested outside the contract, this would be reviewed by the assessing officer as to suitability.

Can the guarantors provide cash/term deposit as their security for the Secondary loan?

No, Heritage only accepts cash security for short term purposes, eg substitution of security while waiting for new purchase to settle.

Can customer borrow 100% plus costs, plus debt consolidation of up to 5% of purchase price, plus $50,000 cash out?

Yes, if they are First Home Buyers, meet LVR restrictions, cash out is for home improvements, and they meet all other lending criteria.

If debt consolidation required is more than 5% of purchase price, can I use some of the $50,000 cash out to make up the difference?

No. However, if customer has some savings, as they are able to borrow 100% of purchase plus costs, they may be able to use their own funds to make up the difference to enable cancellation and closure of those debts. Loan would still be conditioned for closure of these facilities so applicant would need to make their contribution available for settlement.

Can the borrower's debt on the Primary Loan be increased in line with capital growth, provided the Secondary loan, and therefore, the guarantee amount, does not increase?

This would be considered on a case by case basis, but would require the guarantor/s consent.

Can the FHOG still be accepted by Heritage as family member will be providing financial assistance (ie there will be a Yes answer on the application)?

Yes, although Queensland is the only state that asks specific questions around financial assistance. At time of submission of a Queensland FHOG application, borrower would need to provide a Statutory Declaration detailing the financial help being provided from the Guarantor/s. Where the FHOG has Q5 answered Yes, a further Statutory Declaration is required clarifying how much the person is residing in the home being purchased.

Can I use the Contract of Sale, or an AVM or Desktop valuation for either the property being purchased, or the guarantor's property?

No, to protect both our borrower and guarantor, as well as Heritage, it was considered that a full valuation should be obtained for all security properties under the Family Guarantee arrangement. This would be a Residential Short Form valuation. This may require lenders to override the suggested valuation type within the Valex system. 

Who does the guarantor disclosure policy apply to?

The criteria must be met in all guarantor scenarios and applies to the borrower only (not the guarantor).