Buy a Home Sooner
With Family Support
A guarantor home loan may help you buy a property with a smaller deposit. A close family member can use the equity in their property as additional security for your loan.
What is a Guarantor?
A guarantor is usually a close family member who uses equity in their property as security for your home loan.
You remain the owner of the property and are fully responsible for repayments. If you are unable to meet your loan obligations, the guarantor may become responsible for the guaranteed portion of the debt.
Who Can Be a Guarantor?
- Parents or Step-Parents
- Grandparents
- Brothers & Sisters
- Spouse or Partner
- Adult Children (in some cases)
- Aunts, Uncles or Cousins
Lender policies and eligibility criteria apply.
How Much Can You Borrow?
Depending on the lender and your circumstances, eligible borrowers may be able to borrow up to 105%–110% of the property value.*
This may help cover:
- Purchase price
- Stamp duty
- Legal & conveyancing costs
- Building & pest inspections
- Other associated expenses
* Subject to lender policy, income, expenses and credit criteria.
Typical Borrowing Limits
| Loan Purpose | Maximum Borrowing |
|---|---|
| First Home Buyers | Up to 105% |
| Construction Loans | Up to 105% |
| Refinancing | Up to 100% |
| Debt Consolidation & Purchase | Up to 110% |
| Investment Properties | Up to 105% |
* Subject to lender policy, income, expenses and credit criteria.
Guarantor Loan Requirements
- A suitable family member willing to act as guarantor
- Sufficient equity in the guarantor's property (typically at least 20%)
- Acceptable financial position for both parties
- Independent legal advice for the guarantor
- Property meets lender policy & valuation criteria
How Does a Guarantor Home Loan Work?
Family Support
A family member offers equity in their property as security.
Boost Your Deposit
The guarantee may help you meet the lender's deposit requirements and potentially avoid LMI.
Purchase Your Home
You may be able to purchase your property sooner with a smaller deposit.
Make Repayments
You make all loan repayments. The property remains 100% yours.
Build Equity
As your equity grows, you may be able to reduce or remove the guarantee.
Remove Guarantee
Once sufficient equity is established, the guarantee may be released subject to lender approval.
Example
Sarah wants to purchase a home valued at $600,000.
- She has saved a $60,000 deposit (10%).
- Lender requires 20% deposit to avoid LMI.
- Sarah's parents guarantee the remaining $80,000 shortfall.
Result:
Buys the property sooner
Potentially avoids LMI
Avoids spending years saving more
Guarantee can be removed in the future
Benefits of a Guarantor Home Loan
Faster Entry Into The Property Market
Purchase a home sooner without waiting years to save a large deposit.
Avoid LMI & Save Money
Save thousands of dollars by reducing or eliminating LMI costs.
Increased Borrowing Capacity
Additional security may allow you to access a larger loan amount.
Keep Your Savings Available
Use your funds for moving costs, renovations, emergencies or investments.
Temporary Family Support
Many guarantees can be released once sufficient equity has been established.
Things to Consider
Financial Responsibility for the Guarantor
If repayments are not maintained, the guarantor may be required to cover the guaranteed portion.
Impact on Future Borrowing
The guarantor's borrowing capacity may be reduced while the guarantee is in place.
Family Relationships
Clear communication and understanding are essential when entering into financial arrangements.
Credit File Consequences
Missed repayments may negatively affect both the borrower and guarantor.
Property Security Risk
In serious default situations, the lender may take action against the guarantor's secured property.