A LOAN applicant to the National Housing Trust whose income is insufficient to qualify for the maximum loan of $800,000 may obtain this loan amount through the guarantor programme.
The programme allows a single applicant to combine income with another person to increase his or her loan or the value of the security amount, up to the maximum loan amount allowed an individual.
However, the guarantor can only secure a maximum of $200,000 on behalf of the applicant.
When a borrower is using a guarantor, a debt service ratio of 50 per cent of the borrower's income, the maximum home owner's loan or the value of the security, whichever is less, will be used to determine the loan amount.
SPECIAL CONDITIONS
The borrower can only use a guarantor to access a loan if there is a registered title for the property.
A guarantor must be a qualified contributor who has never received an NHT loan, but may otherwise be a home owner; he/she becomes liable for the total loan amount obtained by the borrower.
A guarantor may obtain a personal loan, limited to the difference between the loan amount he/she has guaranteed and the maximum loan entitlement, once it is determined that he/she can afford this additional amount.
To afford his or her personal loan amount, the guarantor's income must meet the debt service ratio of 40 per cent of the total loan: that is, 40 per cent of the total loan obtained by the borrower and the loan amount the guarantor now wishes to access.
If, for example, the borrower had obtained a loan of $600,000 plus the $200,000 guaranteed by the guarantor; and the guarantor now wishes to borrow the remaining $600,000 to which he or she is entitled; the guarantor should have an income that is equal to or greater than 40 per cent of $1.4 million.
This $1.4 million represents the $800,000 obtained by the borrower, plus the $600,000 the guarantor now wishes to borrow.
Once a person is serving as a guarantor, he/she will not be able to use a guarantor to help in qualifying for his or her personal loan.
A borrower may change the guarantor even after the loan has been disbursed: that is, the borrower may release the guarantor from the mortgage obligation provided there is another qualified NHT contributor willing to sign up as the new guarantor.
A person can guarantee only one loan at any given time.
