Your parents might still be able to help you if they have enough equity
remaining on their home loan. Some lenders will allow your parents to secure a guarantee on their property with a second mortgage.
Lenders will look into the total debt secured on your parents’ property to calculate how if they have enough equity in their property. Generally, their current home loan and the new limited guarantee
must be less than 80% of the property value.
For example, if your parents have a home loan with $150,000 owing and they have agreed to provide you a limited guarantee of $100,000, then the total debt secured on their property is $250,000. Their property must be worth above $250,000 for the guarantor loan to be approved.
Furthermore, your parents should not apply to be a guarantee when they already have a home loan unless:
- The consent for the second mortgage is granted.
- A bank valuation is performed on your parents’ property.
- The lender has issued formal approval.
You can use our guarantor loan calculator
for more information.