Parents looking to help their children find their ideal Australian property have been warned about the hidden dangers of becoming a guarantor.
In a recent interview with the Sydney Morning Herald, Graham Doessel, director of MyCRA credit repairs, advised guardians against taking on the role because it could put their own property under threat.
Mr Doessel claimed that family homes could be placed under default, which can hinder a guarantor's credit for five years if their offspring fails to make repayments.
For this reason, parents have been advised to ask themselves some simple questions about the likelihood of their child being able to afford to take out a loan.
"Worst case scenario is the bank begins to use the property the guarantor put forward as collateral to recover lost debts. There is a danger the guarantor can lose their home," Mr Doessel warned.
First Rung Now suggests that parents who are still earning a sufficient monthly income from their pension could take out a joint mortgagee with their child, which would mean both salaries are taken into account upon application.
Posted by Ravin Chatlani
In a recent interview with the Sydney Morning Herald, Graham Doessel, director of MyCRA credit repairs, advised guardians against taking on the role because it could put their own property under threat.
Mr Doessel claimed that family homes could be placed under default, which can hinder a guarantor's credit for five years if their offspring fails to make repayments.
For this reason, parents have been advised to ask themselves some simple questions about the likelihood of their child being able to afford to take out a loan.
"Worst case scenario is the bank begins to use the property the guarantor put forward as collateral to recover lost debts. There is a danger the guarantor can lose their home," Mr Doessel warned.
First Rung Now suggests that parents who are still earning a sufficient monthly income from their pension could take out a joint mortgagee with their child, which would mean both salaries are taken into account upon application.
Posted by Ravin Chatlani
