4.3 Family Pledge
Target Market: Suited to borrowers, especially First Home Buyers with no deposit, who have an immediate family member that is willing and able to offer security and servicing support.
Benefits: Allows borrowers to own their own home sooner by allowing them to borrow the full purchase price plus up to an additional 10% to cover costs.
| Maximum LVRs & Loan Amounts |
| Property Type | LVR | Category 1 | Category 2 | Category 3 | All Other |
| House/Unit | 0 - 85% | $750,000 | $500,000 | $400,000 | N/A |
Maximum Loan Amounts apply on a 'per security' basis.
*Product Parameters as per Standard LMI section 4.1 to apply, in addition to product specific parameters listed below:
| Feature | Product Parameters (Summary) |
| *Loan Purpose | - May include small debt consolidation of up to 10% of purchase price (at original application only)
- Excludes:
- Purchase vacant residential land
- Home Improvement
- Refinance existing mortgage
- Equity Release/Cash Out.
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| *Security | - Vacant land is unacceptable
- Maximum of 2 security properties for each application (property being purchased plus pledge security).
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| *Deposit/Equity | - No deposit or genuine equity required.
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| *Borrowers | - All borrowers must be titleholders for the property being purchased
- Must be natural persons
- Australian Residents only.
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| Employment/Income | - As per Standard LMI Product Parameters section 4.1.
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| *Credit History | - As per Standard LMI Product Parameters section 4.1.
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| *Loan Term | |
| *Repayment Type | - Excludes IO (unless converting to P&I).
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| Maximum Borrower Exposure | - As per Standard LMI Product Parameters section 4.1.
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| *Lender Responsibility | - Lender needs to have satisfactory systems and/or processes in place that link borrower and guarantor securities and loans.
- Required to have parameters and documentation to manage risks involved with third party guarantee securities. (Genworth does not cover losses eventuating from the pledge guarantee being invalid or unenforceable).
- In all other respects, LMI proposals must meet Genworth LMI Underwriting Policy.
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| *Guarantor/Pledge | - Borrowers maximum LVR before the pledge is 110% (ie total loan amount/purchase property security value or purchase price)
- Guarantors maximum LVR is 50% for the pledge component only (ie total pledge amount / guarantor security property value)
- Guarantors maximum LVR is 70% including all pledge amounts and any outstanding debt secured by the guarantor's property (ie total guarantor debts [secured by this security property] = pledge/guarantor security property value)
- The pledge is a 'Limited' personal guarantee that limits the guarantors' liability to a specific amount
- The guarantee must be supported by either a 1st or 2nd mortgage over residential real estate
- Eligible guarantors must be an immediate family member to the borrower - parent, child or sibling
- All registered proprietors of the pledge security property must be guarantors
- No company or trustee guarantors
- A maximum of one pledge per application. However, guarantors are able to provide up to a maximum of two pledges, provided each pledge applies to an individual loan proposal for separate borrowers
- In the event of borrower default, Genworth would exercise its rights under the master policy agreement to require the Lender to exercise its own rights under the pledge prior to the submission of an LMI claim
- The guarantor/s must provide a full application form with supporting financial information including details of the security property and any outstanding debt against the security property
- Where there is finance outstanding against the guarantor's security property, six months loan statements evidencing satisfactory conduct are required
- Serviceability will be tested on guarantors to determine whether they can service the guaranteed loan in the event the borrowers cannot meet their commitment. In cases where serviceability is not evident by guarantors, consideration will be given to other sources of equity to clear debt outside of selling the guarantor's owner occupied property.
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| Premium Capitalisation | - As per Standard LMI Product Parameters section 4.1.
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| *Loan Features | - Excludes:
- Line of Credit
- Parenting Repayment Break.
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