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What is a third party mortgage?

A Third Party Mortgage is a document of security over an asset whereby one party being the owners of that asset pledges it as security for another party’s loan.

The document itself can be “all in one” or it can be a mortgage document taken in conjunction with a Guarantee or Guarantee and Indemnity document.  The document can be either unlimited, for a specific loan or for a specific part of that loan.

In home loans it is becoming more common for parents to guarantee the deposit component of a home loan to allow their children to purchase a home.

In general terms a guarantor should always be very careful when pledging their assets in support of somebody else’s loan because a breach of that contract may see asset sold by the lender to recover the debt.

Ethical lenders are generally very careful in whom they will accept third party mortgages or guarantees from and often insist that independent legal advice is sought.

Please seek legal advice and Call Your Local Finance mortgage broker on 1300 787 665 to discuss your options.  


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