Problems with interest rates and repayments? Ask for home loan help.
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The answer to this question is dependant upon a number of factors. The reason why your current lender has asked for a guarantor in order to approve a home loan for you in the first place is that you are unable to fulfil its current lending requirements and the most common reason for this is the lack of equity (namely a deposit) in the purchase of a property.
By taking a guarantee (usually from a parent) with the addition of security, such as a mortgage over their real estate, the lender is able to approve your application as equity requirements have been met. A lender may also gain some comfort from the presence of a guarantor as a secondary servicing source if they have some reservations over the stability of a borrower's income.
In order to have an your existing lender release a guarantor you will need to meet the lenders requirements current, not now, but at the time that you seek the release. This means an improvement in property values and/or the debt needs to be reduced as well as repayments having to be made to the satisfaction of the lender. Some lenders will take a fresh application to reassess their risk before allowing the release of a guarantor. Even then the release of a guarantors supporting real estate may mean that a mortgage insurance policy is required and this will be at your expense. The passage of time is not sufficient in itself if your situation has not changed.
At all times the release of a guarantor is totally at the discretion of your current lender.
Should you seek to refinance with another lender in your own name then you need to be aware of any costs and penalties that may apply before you proceed.
You should regularly discuss your situation with your mortgage broker who will be aware of the general approval requirements of many lenders and may identify an alternative lender who will consider your situation without the need for a guarantor either now or in the future.
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