Well, family pledges are good. However, sometimes things can be very complicated and getting to a new home for young couples can turn out to be very hard. Allow me to explain this point with the illustration below.
Generally, where there is enough equity in the homes of the parents, they can pledge a portion for the security of their children purchase. For example, an applicant wants to purchase a home for 600, 000 dollars but just have 25, 00 dollars that he wish to use for the refurbishment of the home he wants to buy.
The parents can pledge 150, 000 dollars of their security towards the new home the child want to purchase which will make the overall security to be 750, 000 dollars. The loan he wishes to borrow will now be LVR 80 percent of the overall security for the new home. It is worth keeping it in mind that the pledge by the family is a gift so it is not refundable it’s like a second mortgage on part of their home.