1. Assess Your Position

We review your savings, income, borrowing capacity, and identify how much guarantee you'll need.

2. Guarantor Eligibility Check

Your guarantor (usually a parent or immediate family member) needs sufficient equity in their property and meet the lender's requirements.

We compare guarantor loan options across 30+ lenders — not all treat guarantor loans the same. Some accept a wider range of guarantors and offer better terms.

Both you and your guarantor submit applications. We handle the paperwork for both parties, making the process seamless.

5. Settlement & Guarantee Release Plan

You settle on your new home, and we set a plan to release the guarantee once you've built enough equity (usually 80% LVR through repayments + property growth).

Guarantor Home Loans | No Deposit Needed

What Is a Guarantor Loan?

A guarantor loan allows a family member — usually a parent — to use the equity in their own property as additional security for your home loan.

This means you can purchase a home with as little as 5% deposit (or sometimes even less) without paying Lenders Mortgage Insurance (LMI), which can cost anywhere from $8,000 to $35,000+ depending on your loan amount.

Importantly, the guarantor doesn't hand over any cash. They're simply allowing a portion of their property's equity to act as security. They remain on the title of their own home and continue to make their own mortgage payments as normal.

The guarantor is only liable for the portion of the loan they guarantee — typically the difference between your deposit and 20% of the property value — not your entire loan.

Parents handing house keys to their adult child

How a Guarantor Loan Works

A guarantor loan follows a structured process to get you into your home with family support.

📊

1. Assess Your Position

We review your savings, income, borrowing capacity, and identify how much guarantee you'll need.
✅

2. Guarantor Eligibility Check

Your guarantor (usually a parent or immediate family member) needs sufficient equity in their property and meet the lender's requirements.
🔍

3. Lender Matching

We compare guarantor loan options across 30+ lenders — not all treat guarantor loans the same. Some accept a wider range of guarantors and offer better terms.
📝

4. Dual Application

Both you and your guarantor submit applications. We handle the paperwork for both parties, making the process seamless.
🏡

5. Settlement & Guarantee Release Plan

You settle on your new home, and we set a plan to release the guarantee once you've built enough equity (usually 80% LVR through repayments + property growth).

Key Benefits of a Guarantor Loan

🏠

Buy Sooner

Don't wait years saving for a 20% deposit — get into the property market now while your family member's equity helps bridge the gap.

💰

Avoid LMI

Lenders Mortgage Insurance can cost $8,000–$35,000+ — a guarantor loan eliminates this cost entirely.

📈

Start Building Equity

Every year you rent is a year you're not building equity in your own property. Get in sooner and start building wealth.

🔒

Limited Guarantor Risk

The guarantee only covers a portion of your loan (typically 20% of the property value minus your deposit) — not the full loan amount.

🏗️

Works for Multiple Loan Types

Guarantor loans aren't just for purchases — they can also work for construction loans, house and land packages, and off-the-plan purchases.

✨

Guarantee Release Pathway

Once your loan-to-value ratio reaches 80% (through repayments and property growth), the guarantee can be removed — often within 2–5 years.

Real Example: How a Guarantor Loan Saves $28,760

See how using a guarantor can dramatically reduce the cost of buying your first home.

Mia & Josh's First Home Purchase — $750,000

They've saved $37,500 (5% deposit). Without a guarantor, they'd need to pay LMI of $28,760.

❌ Without a Guarantor

Purchase price$750,000

Deposit (5%)$37,500

Loan amount (95% LVR)$712,500

LMI premium (added to loan)$28,760

Total loan$741,260

Monthly repayment (6.2%, 30yr)~$4,535

✅ With a Guarantor

Purchase price$750,000

Deposit (5%)$37,500

Parents guarantee 15%$112,500

Effective LVR drops to 80%NO LMI

Total loan$712,500

Monthly repayment (6.2%, 30yr)~$4,359

🔓 Guarantee Release — After ~3 Years

Property value increases to~$825,000

Loan balance reduced to~$688,000

New LVR~83%

Parents' guarantee released at 80% LVR✅

Parents' property unencumbered✅

Savings: $28,760 upfront + $176/month = $92,120 over life of loan

Illustrative example only. Actual rates, fees, and outcomes depend on lender policy and your individual financial situation. Your full financial situation would need to be reviewed prior to acceptance of any offer or product.

Who Can Be a Guarantor?

Not everyone can act as a guarantor — here's what lenders typically require and what to keep in mind.

✅ Eligible Guarantors

✅Parents (most common)
✅Siblings with sufficient equity
✅Grandparents (select lenders)
✅De facto partners' parents
✅Must own property with sufficient equity
✅Must be Australian citizens or permanent residents

⚠️ Important Considerations

⚠️Friends are generally NOT accepted as guarantors
⚠️Guarantor's property must not be cross-collateralised with other debts
⚠️Guarantor needs independent legal advice before signing
⚠️Guarantee amount is limited (not full loan amount)
⚠️Guarantor's borrowing capacity may be temporarily reduced
⚠️Some lenders have age limits for guarantors

How Finance Hub & Networks Helps

Guarantor loans require careful lender selection and dual-party coordination. Our brokers specialise in matching you with the right lender and ensuring a smooth process for both borrower and guarantor.

Finance Hub broker explaining guarantor loan options to a family in office

We Find Guarantor-Friendly Lenders

Not all lenders treat guarantor loans the same. Some accept a wider range of guarantors, offer lower rates, or have easier release conditions. We know which ones work for your situation.

We Handle Both Applications

The guarantor application can be just as complex as the borrower's. We manage the paperwork for both parties, making the process smooth and supported.

We Create a Guarantee Release Plan

From day one, we map out exactly when and how the guarantee can be removed — so your parents aren't on the hook longer than necessary.

We Protect the Guarantor

We ensure the guarantee is limited to the minimum amount needed, and we recommend independent legal advice for the guarantor's protection.

Book Your Obligation-Free Consultation Free Assessment

Frequently Asked Questions

What is a guarantor loan?+

A guarantor loan allows a family member (usually a parent) to use equity in their property as additional security for your home loan. This means you can buy a home with a smaller deposit — often as low as 5% — without paying Lenders Mortgage Insurance (LMI). The guarantor doesn't provide cash; they simply allow their property equity to support your application.

How much can I save by using a guarantor?+

The primary saving is avoiding LMI, which typically ranges from $8,000 to $35,000+ depending on your loan amount and deposit size. On a $750,000 property with a 5% deposit, you could save approximately $28,760 in LMI alone. Plus, by getting into the market sooner, you start building equity instead of paying rent.

Who can be my guarantor?+

Most lenders require the guarantor to be an immediate family member — parents are the most common. Some lenders also accept siblings, grandparents, or de facto partners' parents. Very few lenders accept friends or non-family members. The guarantor must own property with sufficient equity and meet the lender's eligibility requirements.

What are the risks for my guarantor?+

The guarantor is only liable for the guaranteed portion of the loan — typically 15–20% of the property value — not your entire loan. If you default, the lender would first sell your property. Only if the sale doesn't cover the debt would they pursue the guaranteed amount. We always recommend guarantors obtain independent legal and financial advice.

How long does the guarantee last?+

The guarantee typically remains in place for 2–5 years, until your loan-to-value ratio (LVR) drops to 80% or below. This happens through a combination of your regular repayments and natural property value growth. We create a release plan from day one so you know exactly when to expect the guarantee to end.

Can I release the guarantor early?+

Yes! Once your LVR reaches 80% — either through making extra repayments, property value appreciation, or a combination — you can apply to release the guarantee. Some borrowers achieve this in as little as 2 years with strategic extra repayments and favourable market conditions.

Does my guarantor need to live in the same state?+

Not necessarily. Most lenders accept interstate guarantors, though some may have restrictions. The property used as security for the guarantee must be residential property (not vacant land or commercial) in most cases. We'll match you with a lender that suits your specific situation.

Can I use a guarantor for an investment property?+

Some lenders do allow guarantor loans for investment properties, but the options are more limited than for owner-occupied purchases. The terms may also differ — for example, some lenders require a larger deposit for investment properties even with a guarantor. Our brokers can identify which lenders offer this option.

What happens if my guarantor sells their property?+

If your guarantor wants to sell their property before the guarantee is released, you'll need to either refinance to remove the guarantee (if your LVR allows), substitute another security, or pay LMI to continue without a guarantor. It's important to discuss this possibility upfront with your broker.

Should I use a guarantor or wait to save a bigger deposit?+

This depends on your individual circumstances, but consider this: property prices in many Australian markets have historically grown by 5–7% per year. If you're saving $20,000 per year toward a deposit, property prices may be rising faster than you can save. A guarantor loan lets you get into the market sooner and start building equity, while your family's support helps avoid the cost of LMI. Our brokers can model both scenarios for your specific situation.

Guarantor Loans