Home › Home Loan Guides ›
Family Guarantor Home Loans (Family Security Guarantees)
With the help of a guarantor or a family pledge home loan, you can buy your own home or an investment property with little or no deposit.
(No cost, no obligation - just friendly advice.)
🏠 First-home buyer support
A family guarantor loan lets you use equity in a parent’s (or close family member’s) property as extra security, so you can buy a home sooner with little or no deposit, and in many cases avoid Lenders Mortgage Insurance (LMI).
This guide walks you through how guarantor loans work, who can be a guarantor, what the risks are, and how to plan an exit so the guarantee can be released as soon as possible.
It’s general information only. I’ll always assess your situation and lender policies before recommending any specific strategy.
How does a guarantor home loan work?
In a typical guarantor home loan, you borrow up to the full purchase price (and sometimes costs such as stamp duty and legal fees) against the property you are buying. A second, smaller “guarantee” portion of the loan is secured by a family member’s property, usually your parents’ home or investment property.
- You are responsible for making all loan repayments on the combined loan.
- The guarantor offers a limited guarantee secured against their property, usually only up to a set amount (for example, enough to bring the overall Loan to Value Ratio (LVR) back to 80%).
- When your loan balance reduces or your property value increases enough, the guarantee can be removed and the guarantor’s property is released.
Example (simple illustration only):
Purchase price: $600,000
Costs (approx): $25,000
Total needed: $625,000
Existing savings: $10,000
Loan against new property: $615,000 (98.4% including costs)
Limited guarantee secured against parents’ home so that, from the lender’s perspective, combined security brings the LVR back to 80%.
As the loan reduces and/or the property grows in value, we can plan to release the guarantor.
Purchase price: $600,000
Costs (approx): $25,000
Total needed: $625,000
Existing savings: $10,000
Loan against new property: $615,000 (98.4% including costs)
Limited guarantee secured against parents’ home so that, from the lender’s perspective, combined security brings the LVR back to 80%.
As the loan reduces and/or the property grows in value, we can plan to release the guarantor.
Why consider a guarantor home loan?
For many first-home buyers, saving a full 20% deposit while rents and property prices rise can feel impossible. A guarantor loan can help bridge that gap.
- Enter the market earlier instead of waiting years to save.
- Reduce or avoid LMI, which can save many thousands of dollars.
- Keep more of your savings for a buffer, furnishings or small renovations.
- With the right structure, you can plan to remove the guarantee in a relatively short time frame.
Good to know: A guarantor loan is not the only
way to buy with a low deposit. Government guarantee schemes, genuine
savings and co-ownership with family or friends may also be worth
exploring. You’ll find links to these guides at the bottom of this
page.
Who can be a guarantor?
Lender rules vary, but most commonly guarantors are your parents. Some lenders will also consider other close family members such as grandparents, siblings or adult children.
- Guarantors must usually be Australian citizens or residents.
- They need sufficient usable equity in their own property after allowing for any existing lending.
- Many lenders prefer the guarantor to have stable income and a strong credit history, even if the guarantee is limited.
Most lenders will not accept guarantees from friends, colleagues or business associates.
Common questions about family guarantor loans
What if my parents are retired?
Some lenders will consider guarantees from retirees, pensioners or self-funded retirees, provided they obtain legal advice and the arrangement is considered appropriate for their situation.
The lender will look at your capacity to meet repayments without needing help from the guarantor, and may also look at the guarantor’s remaining assets and retirement income to ensure the risk is reasonable.
It’s especially important that retired guarantors understand the potential impact on their home, which is often their key asset in retirement.
What if the guarantor already has a home loan?
Your guarantor can still help even if they have an existing mortgage, as long as they have enough equity in their property once all debts are taken into account.
Usually, the combined lending against the guarantor’s property (their own home loan plus the limited guarantee amount) must stay within a certain LVR, often 80% or less of the property’s current value.
Simple example:
Guarantor’s property value: $800,000
Existing home loan: $300,000
Maximum at 80% LVR: $640,000
Approximate room for guarantee: $340,000 (subject to lender policy and other factors).
Guarantor’s property value: $800,000
Existing home loan: $300,000
Maximum at 80% LVR: $640,000
Approximate room for guarantee: $340,000 (subject to lender policy and other factors).
How much of the loan will the guarantor be responsible for?
We aim, wherever possible, to set up a limited guarantee. This means the guarantor is only liable for a defined portion of the loan (for example, the top 20% plus costs), rather than the whole debt.
The exact limit will depend on the purchase price, your deposit, and how the lender structures the lending. We’ll outline this very clearly so everyone understands the numbers before signing anything.
When can we remove or release the guarantor?
The guarantee can usually be released once the loan against your property is comfortably within the lender’s standard lending limits, often 80% LVR or below, and the home loan has been conducted well.
- Your property value has increased, or you have made extra repayments, so your equity position is stronger.
- Your repayment history is clean, with no late or missed payments.
- You still meet the lender’s serviceability requirements in your own right.
At that point we can approach the lender to refinance, restructure or simply remove the guarantee and any associated mortgage over the guarantor’s property.
Can a guarantor help with building or constructing a home?
Yes, some lenders allow guarantor structures for land and construction loans. This can help you fund the land purchase, build contract and related costs.
Construction lending is more complex, because progress payments, valuations and timing all matter. I’ll usually:
- Map out a full budget including land, build, contingencies and costs.
- Confirm which lenders allow guarantor support for construction.
- Plan an exit for the guarantor once the home is completed and the value has been confirmed.
For more detail, see the separate construction home loan guides in the related links below.
Is a guarantor loan right for everyone?
No. In some situations it can place too much pressure on family relationships or the guarantor’s retirement plans. In others, a government guarantee scheme, a smaller purchase, or waiting to build a bigger deposit may be safer.
My role is to model the options for you and your family so you can make an informed decision together.
Other strategies to get into your first home
A guarantor loan is only one path to home ownership. Depending on your situation, we may also look at:
- Government guarantee schemes that let you buy with as little as 5% deposit without paying full LMI.
- Saving a deposit over time, using genuine savings, bonuses and tax refunds to build your base.
- Buying with family or friends under a structured co-ownership agreement.
- Adjusting the price point or location so that a smaller deposit goes further.
- Bridging strategies if you already own a property and are deciding whether to sell first or buy first.
You’ll find detailed guides on each of these options in the “Related articles” section below.
Want personalised advice on using a family guarantor?
If you’re considering using a parent or family member as security, it’s worth getting the structure right from the start and mapping out a clear exit strategy for everyone involved.
- Confirm whether a guarantor loan is suitable for you.
- Model how quickly the guarantee could be released under different scenarios.
- Compare alternative options such as government schemes or co-ownership.
Book a free chat
➜
No obligation, just a conversation about your plans and what might
be possible.
You’re in safe hands
15+ years mortgage experience
Accredited with 40+ lenders
Based in North Lakes, helping clients Australia-wide
Personalised, one-to-one advice
MFAA Accredited Member
Part of Australia’s largest aggregation group – LMG
Ready to discuss your options? Give us a call now.
Categories
Contact
Social
Your Home Loan Consultant - Mortgage Broker Brisbane - ABN 78 596 155 035. James Sylvester is a Credit Representative No. 400033 of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237). Member of the Australian Financial Complaints Authority (AFCA member 48768).
The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation, any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.
Copyright 2026 Your Home Loan Consultant, all rights reserved