This is a very pertinent question. If you provide a security guarantee, you are essentially locking up your property. This type of guarantee is usually provided for the benefir of children buying their first home. The benefit to the first home buyer is that they do not have to save a deposit to have a home loan or pay the Lenders Mortgage Insurance - LMI cost.
The disadvantage to you is that, with a Family Guarantee or Family Pledge, you will not be able to sell your property until and unless the borrrowers can repay the same amount as the guarantee amount back to the bank (or non bank lender). The alternative is of course to increase their loan size when you want to sell so the bank can release your mortgage but no bank will increase a home loan to 100% of the value.
If you sell the property then you may be able to keep some of the cash from the sale in a term deposit with the bank and they can use that as security for the guarantee. This isn't possible with every lender so talk to your mortgage broker to find out if this will work for your situation.
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