How much can I borrow?

Guarantor home loans are now the only way to borrow between 100% and 110% of the purchase price of a property.

How much you can borrow using a guarantor loan may depend on what type of borrower you are:

  • First home buyers: 105% of the property value
  • Construction: 105% of the total land value and cost of construction.
  • Refinancing: 100% of the property value.
  • Debt consolidation and purchase: 110% of the property value.
  • Investors: 105% of the value of your investment property.

Technically, there is no maximum loan size. However borrowing over $1,000,000 will require you to meet additional credit criteria.

Call us on 1300 889 743 or complete our online enquiry form to discover if you qualify for a guarantor home loan!

Only some lenders accept second home buyers

Many lenders will not allow second home buyers to apply for a guarantor loan as they expect that they should have a strong enough asset position to buy a property on their own.

This is particularly unfair to people who have gone through a divorce or illness forcing them to sell their previous home. We know which lenders are less conservative when assessing their guarantor loans.


How do guarantor loans work?

Your guarantor will provide a guarantee for your home loan which is secured on their property. In most cases, this is your parents assisting you to buy a home.

The idea is for you to get into the property market sooner. Once you have paid off part of your loan or your property has increased in value, then you can apply to remove the guarantee.

Guarantor loans have become very popular in recent years as they cost less than standard home loans, they allow you to buy without a deposit and some lenders now allow you to limit the size of the guarantee.

What are the benefits of a guarantor loan?

Recently, no deposit home loans have been withdrawn from the market which makes guarantor loans the only way to borrow 100% or more of the purchase price.

Guarantor loans have several benefits for you as the borrower:

  • You don’t need a deposit, allowing you to buy a home now.
  • Save money by not paying an LMI premium.
  • Discounted interest rates are available from some lenders.
  • You can consolidate some minor debts, such as credit cards, when you buy your home.
  • You can limit the size of the guarantee.

Our mortgage brokers are experts in guarantor home loans. Please call us on 1300 889 743 or enquire online and we can go through your options with you.

Can I borrow more than 105%

In the past, lenders commonly allowed people to borrow 120% with a guarantor home loan. Unfortunately these loan types are no longer available.

With some lenders today the maximum that you can borrow now is 105% of the purchase price and 110% if you have debts to consolidate.

Many people wishing to buy a home have significant consumer debts such as credit cards and personal loans. If you are in this situation then generally you will be able to consolidate debts as well as purchase a property as long as your total debts are no more than 5% – 10% of the purchase price.

Do I need to prove any savings?

Even though guarantor loans allow you to borrow 100% of the purchase price, many lenders still require you to have 5% of the purchase price in genuine savings. This is simply money that you have saved yourself although there are exceptions such as using paid rent as genuine savings.

Other lenders do not have a specific policy regarding this. Instead their credit scoring system will decline your loan based on your asset position relative to your income.

Banks view people who have a high income and a low asset position to be a high risk. Many young people have spent their money on their education, a car, a wedding or travelling and only begin saving for a house later in life. These people are not high risk borrowers, they just have different priorities!

Talk to us to find out which lenders do not require genuine savings.

Can I buy an investment property?

Only two or three lenders in Australia will accept no deposit investment loans supported by a guarantor.

We can assist you to buy one investment property however buying multiple investment properties is not normally accepted. This is because the guarantor is taking an unnecessarily high risk whereas the borrower is making all of the potential profit.

If the guarantor is in a strong financial position then multiple investment properties may be considered.


How is the mortgage for the guarantee structured?

The loan is secured by both the property that you are buying and the property owned by the guarantor.

It is quite simple, and if you use a limited guarantee then the guarantor can reduce their exposure to your mortgage.

The structure is very similar if your parents already have a home loan on their property. The guarantee for your loan is secured using a second mortgage behind their current loan.

How much is the guarantee limited to?

For the majority of guarantor loans we ask the lender to limit the guarantee secured on the guarantor’s property. This means they are not liable for the entire amount of the loan, only a portion of it. The size of the limited guarantee is calculated as follows:

Size of the limited guarantee = (Loan Amount – (0.8 * Purchase Price))/0.75.

For example if you are buying a property for $500,000 and are borrowing $525,000 to cover your expenses such as stamp duty then the calculation would be:

($525,000 loan amount – (0.8 * $500,000 purchase price))/0.75
$125,000/0.75 = A limited guarantee of $166,700 (rounded to the nearest $100)

Is this all too complicated? Just let our guarantor loan calculator figure it all out for you.

What types of guarantees are there?

Security guarantee: With this type of guarantee the guarantor uses real estate that they own as additional security for your loan. If the guarantor already has a loan on their property, then, in most cases, the bank can take a second mortgage as security.

This type of guarantee is most often used when first home buyers with an excellent are buying a home but no deposit. The guarantor is also called an “equity guarantor” by some lenders.

Security and income guarantee: A security and income guarantor is most often a parent helping their son or daughter who is a student or who has a low income to buy their first property. The lender will use the parents’ property as additional security and will rely on the parents’ income to prove that the loan is affordable.

Family guarantee / parent guarantee: This is when the guarantor is directly related to the borrowers. Banks refer to this as a “parental guarantee”. Grandparents, siblings and other family members as guarantors are considered on a case by case basis.

Limited guarantee:A limited guarantee is where only part of the loan is guaranteed by the guarantor. This is most often used with security guarantors so as to reduce the potential liability secured on the guarantor’s property. Guarantees can either be limited or unlimited, depending on both the guarantor’s wishes and the lender’s requirements.


Who can be a guarantor?

Most banks will only allow parental guarantees, that is, a guarantee from the borrower’s parents.

Some lenders can consider guarantees from immediate family members such as siblings, grandparents, spouses, de facto partners or adult children. Friends, workmates or associates are not normally accepted because the banks want to make sure that the guarantor has a strong relationship with you.

If someone other than your parents is your guarantor, then you may need to meet additional lending criteria in order to qualify for a home loan.

What are the risks of being a guarantor?

On paper, the guarantor is ultimately liable for your home loan should you default.

There is a big fear that banks move quickly to sell your home to cover the remaining debt but the reality is that banks try everything to solve the problem before taking this drastic decision.

The reason is that there is often a significant process and cost involved in trying to sell your home.

Chances are, they will struggle to break even going down this path so they would much rather that you keep paying your mortgage.

To do this, they will want to work out why you’re having trouble managing your repayments and whether a solution can be found.

You’ve lost your job

Let’s that you’ve recently been made redundant from your job as a maths teacher.

Lenders take the view that you have a good chance of getting another job soon.

In the meantime, the bank may reduce your mortgage repayments for a period of time until you’re able to find work again.

Your property will be sold first

Should you still not be able to make your home loan repayments, lenders will always take action on your property first before making the guarantor liable to pay out the outstanding debt.

Of course, it’s important to bear in mind that repossession will only commence if the mortgage has been in arrears for 90-180 days.

Don’t forget the limited guarantee

What if the sale of your child’s property isn’t enough to cover the home loan?

Remember, there is only a limited guarantee in place which means the guarantors are only liable for up to an agreed amount.

This is usually around 20% of the purchase price plus the costs of stampy duty, conveyancing fees and other associated home loan costs.

For example, if the outstanding debt is for $700,000 but the limited guarantee is for only $210,000, the guarantors are only liable to cover the outstanding mortgage up to $210,000.

Obviously, if the property sold for $700,000 or more they wouldn’t have to worry about anything.

However, if the property only sells for $440,000, the guarantor will have to cover up to $210,000 with equity in their property to cover the shortfall but they won’t be liable for the remaining $50,000.

Of course, if the property sells for $590,000, then the guarantor would be liable for $110,000.

There are still more option left!

If the guarantors don’t have the equity or savings to cover the outstanding amount, they can apply for:

  • A second mortgage on the their property.
  • A personal loan.

If all of these avenues have been exhausted, banks will sell the guarantor’s property but will only take enough of the proceeds to cover the home loan up to the limited guarantee.

The rest of the sales proceeds will go to the guarantors.

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Should I act as a guarantor?

Choosing to act as a guarantor a big decision so it’s recommended that you seek independent financial advice. Ask yourself the following questions:

  • How big is the limited guarantee that you’re committing to? Are you able to cover any outstanding costs should things go pear-shaped?
  • Under what condition will you be liable to pay? Generally, banks will only look to take action if the mortgage is in arrears for 90-180 days.
  • What is the character of the person that you’re guaranteeing? This may be difficult to answer if it’s your own son or daughter but you should be honest in answering this question.

If your child is struggling to save a deposit but you want to avoid some of the risks of acting as your guarantor, a parent assist home loan may be better suited to your situation.


When can I remove the guarantee?

Ultimately, you do not want the guarantee to be in place for the entire term of the 30 year loan. You should apply to the bank to remove the guarantee when the following conditions have been met:

  • You can afford the repayments without any assistance.
  • Your loan is for less than 90% of the property value (ideally 80% or less).
  • You haven’t missed any payments in the last 6 months.

Most people are able to remove the guarantee somewhere between 2 and 5 years after they initially set up the loan, although this can vary significantly.

Many guarantees are set up because the borrower has no deposit so removing the guarantee most often depends on how much the property appreciates in value and how much in extra repayments the borrower can afford to make.

You can still remove the guarantee if you owe more than 80% of the property value but you may have to pay LMI to achieve this.


What if my parents already have a home loan?

That’s okay. As long as they have sufficient equity, some of our lenders can still secure a guarantee on their property using a second mortgage.

How do lenders work out if your guarantor has enough equity in their property?

The total debt secured on the guarantors property, for example their current home loan plus the new limited guarantee, must be less than 75% – 80% of the value of their property.

For example, if your guarantor had a home loan with $100,000 owing and they needed to give a limited guarantee of $100,000 then the total debt secured on their property would be $200,000. Their home must be worth $267,000 or more for the guarantor loan to be approved.

Don’t worry if this seems complicated! You can use our guarantor loan calculator to work it out.

What if my parents are retired?

Most Australian banks will not accept a security guarantee from a retired or elderly guarantor.

Not every lender assesses guarantors this way. Some of our lenders can accept guarantees from people close to retirement, pensioners and self funded retirees over 65 years of age as long as they obtain legal advice prior to signing the loan offer.


Guarantor Home Loans FAQs

Why is there no LMI premium?

From the bank’s point of view, if you are borrowing more than 80% of the value of your property then there is a chance that they will lose money if you can’t make your repayments. Because of this they charge you a fee known as Lenders Mortgage Insurance (LMI) to protect themselves in case there is a loss.

This fee can be quite significant, costing more than $10,000.

However with a guarantee as additional security the bank considers your family pledge loan to be under 80% of the value of your property combined with the value of the guarantee. As a result of this they waive the requirement for LMI.

Why is a second mortgage such a big problem?

If your parents already have a home loan secured on their property then the guarantee will need to be secured by a second mortgage.

This isn’t a problem in most cases, however, it can be an issue if your application isn’t submitted to the bank correctly.

Do not commit to a property until:

  • Consent for the second mortgage has been granted.
  • A bank valuation has been completed on your guarantor’s property.
  • Your lender has issued a formal approval.

The lender that already has a home loan secured on your parents’ property needs to give consent to the guarantee being secured on the property. There is a small risk that they will deny or withhold the consent which can leave you high and dry.

The method of calculating the equity in your parents’ property can be very complex if they already have a loan. Please use our guarantor loan calculator or call us on 1300 889 743 for more information.

My bank won’t let me consolidate debt

Very few lenders will allow you to buy a home and consolidate your credit cards or personal loans at the same time. We know which lenders will allow you to roll everything into one simple, low repayment each month.

Note that you can only consolidate a few minor debts, and if your debts are over 5% of the purchase price then you will not be able to roll them into the mortgage with any lender. Your repayments must be on time, every time, before a lender will allow you to combine them into your new mortgage.

What are the names used for guarantor loans?

Every lender seems to have come up with their own name for guarantor loans! St George Bank uses the term ‘Family Pledge’, CBA uses the term ‘Family Support’ or ‘Family Equity’, Rams uses the term ‘Fast Track’ whereas ANZ and Westpac use the term ‘Family Guarantee’.

Confused yet?

Don’t worry, they all mean essentially the same thing. Most of these terms refer to a security guarantee, as only a few select lenders allow other types of guarantees.

There are big differences between the bank’s credit guidelines, loan types and discounts for family guarantee loans.

Can I get a 100% construction loan?

Yes, it is possible to borrow 100% of the land and construction costs if you have a guarantor.

However, be aware that many lenders do not allow “loan increases” on guarantor loans. What this means is that if you buy the land and then apply for the construction loan later, it may be declined!

Please call us on 1300 889 743 to discuss your situation, we know how to structure your loan to get it approved!

Can I get an 80/20 low doc guarantor loan?

Low doc loans cannot be used with the support of a guarantor as lenders are very conservative with their assessment of no financials home loans.

It may be possible to get around this if the guarantor takes out a loan on their property and lends this to you for you to use as your deposit. Although this is not an ideal situation, it can work for some borrowers.

We call this the 80/20 method as you will borrow 80% of the property value and your family member will borrow the other 20% on their property. Many lenders do not accept this method of financing so please enquire online to speak to a mortgage broker that understands this loan structure.

Why do I need an expert?

Guaranteeing somebody else’s loan is a major commitment so you should always seek advice from the appropriate professionals such as your solicitor before deciding to proceed.

We recommend that you have a preliminary discussion with your solicitor before you apply for the loan and then take the ‘Guarantee & Indemnity’ documents to your solicitor for legal advice prior to signing them.

It also helps to seek out a specialist mortgage broker like Home Loan Experts because there are many aspects to consider when applying for this type of mortgage:

  • Getting approval: Lenders are more conservative than ever, but they are particularly conservative with guarantor loans. We know which lenders accept which types of guarantees and which lenders will accept someone in your situation.
  • Know the terms and conditions: Some banks have simple terms and conditions for their guarantor loans and allow you to limit the amount of the guarantee. However many lenders will not limit the guarantee which means the guarantor could be in a much worse position if you cannot make your repayments.
  • The exit strategy: The loan may have a term of 30 years, however you don’t need to keep the guarantee in place for that long. We can help you work out a strategy of either making extra repayments, or refinancing to remove the guarantee in as little as 2 to 5 years.
  • Protecting the guarantor: If you cannot pay your loan then how can you protect your guarantor from having to pay your loan and possibly losing their home? Did you know that you can reduce the risk to the guarantor by obtaining insurance?

If you don’t set up your mortgage in the right way then you may be putting your parents at a higher risk, or you may not be able to remove the guarantee as quickly as you would like.

Please call our mortgage brokers on 1300 889 743 or enquire online to find out how we can help you.


Case Studies

Example of using a guarantor to avoid saving a deposit

The situation

Nick has been renting for a couple of years and decides now is the time to buy his very own home.

He’s found a nice 3 bedroom house not far from where he works. The property is worth $500,000 but he knows if he doesn’t act fast he’ll miss out on buying it.

The problem is that he hasn’t been able to save up a deposit to get a home loan due to renting. He needs at least 5% plus costs in order to qualify for a mortgage.

His parents – who are both retired – are willing to gift him the money for the deposit but it’ll take them around 3 months or so for them to save the money to give to him.

If that weren’t enough, the gifted deposit wouldn’t be classed as genuine savings and it’d take Nick another year or so to build up 5% of the purchase price in his own savings.

The solution

Instead of saving the money and gifting Nick the money for the deposit, his parents can use the equity in their property as security for his home loan.

Their home is valued at $600,000 with around $255,000 owing on their mortgage. Since both of Nick’s parents are retired, there is one lender that will accept this guarantor scenario.

Using their parents’ property as security for a home loan, Nick is able to able to borrow up to 105% of the purchase price to cover the home loan plus the costs of stamp duty and conveyancing fees.

If Nick were to buy the property with his own 5% deposit, he’d be paying more than $20,000 in Lenders Mortgage Insurance (LMI), a one off fee payable when borrowing more than 80% of the property value.

The Result

  • Nick was able to quickly buy the property before someone else did.
  • He was able to avoid mortgage insurance.
  • He was able to use the few thousand that he had saved for the deposit as extra repayments on his mortgage with enough left over to take a little holiday.

Example of using a guarantor loan to consolidate debt

The situation

Alicia and Chris are about to get married and want to buy a family home. They’ve found a perfect place in a quiet suburb valued at $700,000.

Their combined income is around $200,000 and they’re currently paying around $1,000 a week in rent for a studio apartment in the city.

Alicia and Chris also have a car loan with $30,000 owing and a credit card. The credit card is almost at its limit at $6,000 but they’ve been making their payments on time.

They’re paying $750 a month for their car loan and $180 a month in credit card repayments.

They’ve been managing their bills and debts perfectly but they’re worried that they won’t be able to manage all of their financial commitments by having to make home loan repayments as well.

Luckily, Chris’ parents are working full time and own a home worth $1.2 million with around $600,000 owing on the mortgage.

The solution

By using the guarantor option, their bank is willing to lend up to 105% of the purchase price to cover stamp duty and conveyancing fees. On top of that, they’re able to consolidate one of Alicia and Chris’ debts into the home loan.

Effectively, they’ll be borrowing about 109% of the purchase price.

They decide to consolidate the car loan because it has the most amount of debt owing.

The Result

With their home loan approved, Alicia and Chris are paying $4,287 per month in mortgage repayments. This includes their car loan repayments.

So how much are the couple better off by consolidating this debt into their loan?

Well, by not consolidating and continuing to paying their debts separately, Alicia and Chris would have been paying $4,876 per month.

  • They are $589 better off per month and are able to better manage their debt.
  • They avoided having to save a deposit to buy the property.
  • They avoided the cost of LMI.
  • They’re enjoying their new home before they tie the knot.
  • Discounts: Competitive professional package and basic loan discounts are available.

How can you help me get approved?

We are mortgage brokers who specialise in guarantor supported home loans. We can quickly assess your situation, work out which lenders can approve your application and which loans would be the cheapest for your situation.

Our additional free services include reminding you when it may be possible to remove the guarantee and discussing the proposed loan with the guarantor to make sure that they understand and are comfortable with it.

To talk to a mortgage broker that specialises in guarantor supported lending please enquire online or call us on 1300 889 743.

  • daniel

    hi,

    Both me and my partner work full time, I have been with same company for 8yrs and earn $115k per yr, my partner has been employed full time for 4 months and earns around $50k. We have savings of around $20K and are hoping to build or buy new home to take advantage of the $20k first home buyers grant being offered in Qld until July 2017. we have found some land that is of interest for $500k and would then look to spend around $200K on building the house. We have credit card with a $15k limit and approx $8k owing on it and I have a personal loan which costs me $274 per week in repayments. ($30k balance owing) Would we be in a position to borrow the approx $700k we are thinking or are we setting the bar to high at this stage.

    Many thanks

  • Hi Daniel,
    Likely you would qualify with a guarantor loan. We’d need to do the math once we have your application but based on what you’ve said it looks good. You can contact us here https://www.homeloanexperts.com.au/free-quote/

  • Carla Baciadonne

    Hi
    Me & my partner are interested in a knock down rebuild project. Interested in what we can borrow to fund it. Currently luving in the house to be demolished. Land value has come in at $265000 $365000 with curent house $270000 of that loan remains. Cost of new construction is $370000 with builder. Combined annual income $158000
    Is it possible to borrow to fund the construction?

    Thanks

  • Hi Carla,
    Unfortunately it looks like the property would have no equity if you knocked down the current dwelling. If you have a guarantor then we can assist with this.

  • Carla Baciadonne

    What type of guarantor would be required for the loan. What is required of them? My parents own their own home value approx 900000. We also have had a value of the land come in with another valuer at 315000.

  • Hi Carla,
    This would be a security guarantee from your parents that would be secured by a mortgage over their property. The guarantee would be limited and the size of the guarantee would depend on the projected value of your property once it is complete.

  • Jaimie

    Hello,

    My partner and I are wanting to buy our first home but not sure what our best option is as we have found a perfect town block and house plan.

    Im an apprentice on approximately $55,000 annually but will turn tradesman in 5 months where my annual pay will increase to between $100,000 to $150,000 and my partner is on the family tax benefit which is $12,000 a year looking after our little one but will be returning to full time work soon. We don’t have any savings and have a total of $12,000 in loans. Have perfect rental history and currently comfortably pay $400 a week in rent. Neither of our parents own their houses outright yet. The total price of land and house is $350,000.

  • Hi Jaimie,
    The best course of action is to focus on paying off your loans and making sure that you continue to pay your loan on time. When your partner is back at work you’ll have strong incomes and can quickly save $5k of your own. With that you’ll qualify to use a personal loan to make up the rest of your deposit.
    The key thing is for you not to apply for any other loans. If you have too much debt then you won’t qualify. This is only for people with high incomes and a small deposit of their own.

  • harley

    hey, my mum said she will go guarantor for me, i havd recieved 10k as a gift and have 15k of my own. so a total of 25k. i am a university student at the moment. only making about 23-28k annually. she only has about 300k in equity in her property. is there any way i would be able to borrow around 300k?

  • Hi Harley
    The may be possible if your mum is still working and has a high income. Then she can be an income and security guarantor. She’d need to own part of your property and she’d need to assist with loan repayments, on your current income you couldn’t afford to buy. Have a discussion with your mum and see if this is something that may be suitable.

  • shjudd

    My MIL is retired. She owns her home and is valued at around $1000000. We want to buy something around $600000 and have $20000 of our own. Is this possible?

  • Hi shjudd,
    Yes, this is possible though note that most Australian banks will not accept a security guarantee from a retired or elderly guarantor. There are some lenders who can accept your guarantor as long as they obtain legal advice prior to signing the loan offer. They may be required to present a solid exit strategy to the lender.

  • Jade Borg

    Hi me and my partner want to buy a house which is $175,000 I just asked my mum for the deposit of 5% but she got knocked back so we have no deposit. But my partner works in the mines full time and has no debts except his car. I am currently not working so I am on Centrelink payments is there anyway to get the whole amount for the house.

  • Hi Jade,
    The only way you can borrow 100% on a mortgage is through a guarantor home loan. If your parents have enough equity in an existing property that’s in Australia, you can borrow 100% with their help. Some banks can even accept siblings and uncles/ aunts as guarantor. If you’re not able to qualify, you can consider other no deposit home loan options, which you can check out here:
    https://www.homeloanexperts.com.au/no-deposit-home-loans/

  • Jade Borg

    Does the siblings have to own a house.

  • Yes, they must own property, which will be used to guarantee your mortgage.

  • Jade Borg

    If they own a shop can that count as well

  • Yes, that can count. Please call 1300 889 743 to discuss your situation and loan needs in detail to confirm if you can borrow. Or you can simple complete our online assessment form for a free quote:
    https://www.homeloanexperts.com.au/free-quote/

  • Troy

    Hi my daughter wants to purchase a block of land for 250K and put a 200K house on it.
    She is permanently employed and earns 60K per year. She has no savings and has asked me,(mum & dad) to go guarantor.
    My wife and I are both employed full time, have a mortgage of 210K on a house thats valued around 400K.
    Can this be done and what are the likely impacts/options.
    Cheers

  • Hi Troy,
    Yeah that should be possible, especially considering you have almost 50% equity on your property and that you are both still working. Do note that the security property must be in Australia. Only if your daughter fails to meet her mortgage repayments will the bank use the limited guarantee you provide. If all things go well, the guarantee can be removed once she pays off the loan to 80% (although it can be removed earlier e.g. at 90% LVR if need be). You can check out the “Removing a guarantor” page for more info on this:
    https://www.homeloanexperts.com.au/guarantor-home-loans/removing-a-guarantor-guarantee/

    Before you make the decision to act as a mortgage guarantor, please seek both legal and financial advice.

  • Troy

    Hi, thanks for the quick reply.
    The information is helpful. Will she still be entittled to the FHOG?
    Both houses are in NSW
    Cheers

  • Yes, she should still be entitled to the FHOG as long as she can meet the qualifying criteria for it. You can check out these requirements as well as how to apply for the grant here:
    https://www.homeloanexperts.com.au/home-loan-documents/first-home-owners-grant-guide/

  • Bianca

    Hi,
    My husband and I are looking at building our first home. We have been gifted $10,000 from my parents and are hoping to use the $20,000 first home buyer’s grant to make up the rest of our deposit. We would need to borrow around $290,000. We have no genuine savings, however have a perfect rental history and no debt. My husband works full time however I am a stay at home mum. My mum has agreed to be guarantor for our home loan.
    I was just wondering, with all the information provided, what is the likelihood of us being able to secure a home loan?
    Thank you :)

  • Hi Bianca,
    From the looks of it, you should be able to secure a guarantor home loan without much difficulty. With a guarantor in place, you can borrow 100% of the property value. This means you won’t need a deposit and can keep the gifted cash as well as first home buyer’s grant in hand as standby funds. You’ll also avoid the need for any genuine savings and lenders mortgage insurance. You can check out the no deposit construction loan page for more info:
    https://www.homeloanexperts.com.au/no-deposit-home-loans/no-deposit-construction-loans/

  • Kerry

    Hi my partner is 43 never owned a home and I am 48 and have previously owned a home with ex husband . Can we get a guarantor loan . We have my mothers home 100%owned or partners father home 100% owns plus a lots land valued in the millions…

  • Hi Kerry,
    Yes, you should be able to get a guarantor loan as long as you can meet guarantor requirements of the lender. Most lenders will require your guarantor to be working, and the security property must be in Australia. One of our mortgage brokers can look into your situation and recommend the most suitable lenders for you. Please call 1300 889 743 to speak with us or simply fill in our online assessment form for a free quote:
    https://www.homeloanexperts.com.au/free-quote/

  • Jessica A

    Hi, my credit score isn’t great, its quiet low.. Only because I had one default, but that has now been paid in April 2017. We are going to buy a house in September/October/ November 2017, myself and my partner. His credit score is perfect and we will have around $20,000 in our savings when we apply for our home loan.. His parents are going to go guarantor for us on our home loan, so the savings can be used for renovations.. Their home has just been valued at 1.4 million dollars and they have maybe $150k left owing on their mortgage.. The greater bank told me we should be fine when we apply, but I dont want to risk any decline or the decline enquiry being placed on my credit rating! Would it be in our best interest to put me on the loan application, or no? Will my credit score effect us badly, even if we have a gurantor? And then remove the gurantor once the default has been removed in 4 years.

  • Jessica A

    Apologies, I forgot to add we both work full time great jobs, and his parents earn around 100k each a year..

  • Hi Adriane,
    It really depends on how much you are looking to borrow and what debts you have. If you can let me know:
    – one borrower or two
    – if you have existing debts
    – estimate purchase price
    Then I can let you know what would be considered to be a high income.
    Alternatively you can use this calculator https://www.homeloanexperts.com.au/how-much-can-i-borrow/

  • Mehigan

    My husband and I want to get a home loan but we have no deposit. I’m a stay at home mum but husband is working fulltime PAYG and earns $80k yearly. We thought of going guarantor but what happens if parents are deceased and no one else wants to be guarantor because they are worried about loosing their home?

  • Unfortunately, this would mean you’d need to save a deposit because there aren’t many other options. If you have a high income and no debt then you can use a small personal loan to top up your deposit if you’re almost there. If you’d like, you can check out other no deposit home loan options here:
    https://www.homeloanexperts.com.au/no-deposit-home-loans/

  • Joanne Paroci

    hi,
    can my husband and brother in law by a property together with my mum who is the mother in law use her property worth 500k no mortgage as security?

    ive only been emplyed just shy of 3 months.

    we have only about 6k in savings.

    husbands on 110k a year and brother in law is only approx 70k.

    can he help although he resides in qld?
    the goal will be to buy his share out within 6 to 12 months

    just wondering if this is possible eo they dont need to assess me at this time
    like a tenant in common or something
    80%-20% approx
    thank you!

  • Hi Joanne,
    This one sounds a little complex so it’s best to talk to one of our brokers to confirm what your plans and objectives are and then we can confirm what options you have. To answer your questions:
    1. Yes your husband and BIL can buy a property with your mum as guarantor. Some banks may question that she is not directly related to any of the borrowers FYI.
    2. Your savings and their strong income gives a lot of strength to the application.
    3. Yes your BIL can help even though he’s in QLD. I’m assuming that he will receive some benefit from the transaction e.g. a % of the increase in value.
    4. They will assess your living expenses even if you aren’t part of the loan or an owner of the property. Showing evidence that you work such as payslips will mean that some lenders will ignore your living expenses. If you are a part owner of the property then you will be fully assessed (credit history, income, employment, assets & liabilities).

  • Jessica A

    Hi, my credit score isn’t great, its quiet low.. Only because I had one default, but that has now been paid in April 2017. We are going to buy a house in September/October/ November 2017, myself and my partner. His credit score is perfect and we will have around $20,000 in our savings when we apply for our home loan.. His parents are going to go guarantor for us on our home loan, so the savings can be used for renovations.. Their home has just been valued at 1.4 million dollars and they have maybe $150k left owing on their mortgage.. The greater bank told me we should be fine when we apply, but I dont want to risk any decline or the decline enquiry being placed on my credit rating! Would it be in our best interest to put me on the loan application, or no? Will my credit score effect us badly, even if we have a gurantor? And then remove the gurantor once the default has been removed in 4 years. We both work full time good jobs also.

  • Hi Jessica,
    We’re specialists in guarantor loans and we can look at your situation exactly the way a bank would and work out the best way forward. We can do an authorised agent credit enquiry which does not affect your credit score and allows us to see what the banks would see. Based on that we can recommend the best way forward.
    If you have some savings of your own and a good rental history and a good reason for the default then we may be able to get you approved with a major lender. We really need to see your documents and credit history to be sure.
    Banks and building societies often say they can do something even though they can’t because they don’t have the ability to submit your loan to another lender that may approve the loan. Instead they overpromise and then fight with their credit department to try to get the loan approved. It makes much more sense to apply with a cheaper lender that will approve your loan within their normal policy so that you don’t risk a decline.
    If you’d like our help please apply here https://www.homeloanexperts.com.au/free-quote/

  • Jessica A

    Hi, okay great. We actually dont rent, we live in his parents property & our savings are joint (in my partners account but I contribute $300 weekly to this). If you look up my credit rating, this wont go down as an enquiry will it? I actually have a copy of it so I can send it to you?

  • It’s an enquiry but because it’s an authorised agent enquiry not a lender enquiry it doesn’t affect your score and lenders can’t see it. Alternatively you can buy a copy of your credit file yourself if you like. We don’t mind which you prefer. If you’ve already got a copy then email that to our mortgage broker.
    You’ll need to provide a default explanation letter which you can obtain here https://www.homeloanexperts.com.au/home-loan-documents/default-explanation-letter/

  • Jessica A

    Hi, I do already have a copy, so where do I email this? I have this on file already and have downloaded the default explanation letter also.

  • First enquire here https://www.homeloanexperts.com.au/free-quote/ then within 5 min you should receive an email saying who your mortgage broker is and what their email address is. It should be assigned to one of our guarantor loan specialists automatically.
    Then email it to your mortgage broker.

  • Jessica A

    Hi, Wonderful & thanks so much for your help. Is there a fee incurred?

  • Hi Jess
    Our services are free for most loans. We only charge a fee for small loans (<$200k) or loans that are repaid in the first 2 years. There's more info here https://www.homeloanexperts.com.au/about_us/our-fees/

  • Jessica A

    Hi, Wonderful thank you. We aren’t ready to apply for our home loan yet, we will be doing this in September. Should I wait until then or can someone help me with what is best, now? I applied online but didnt receive an email from anyone.

  • It’s best to discuss it now and then in September you can be sure you qualify.
    You should receive an email, please check your spam folder if you didn’t receive it.

  • Jessica A

    Hi, Wonderful, I havent recieved it yet but ill wait. Thanks so much for your help!

  • Steven

    Hi I’m in Melbourne and just wanting to know which banks or lenders offer 100% guarantor loans?

  • Hi Steven,
    We can help you with this, there’s many lenders on our panel that offer guarantor loans of which approximately three of them tend to be popular with our customers. If you’d like our help then please contact us here https://www.homeloanexperts.com.au/free-quote/
    You can see if you qualify using our guarantor loan calculator https://www.homeloanexperts.com.au/mortgage-calculators/guarantor-loan-calculator/

  • Steven

    Is there a couple you could list as I can’t take calls today

  • Scott Allan

    My parents are of no help as far as guarantors go but a good friend of mine and his wife have a good real estate portfolio with plenty of unencumbered equity and they have offered to go guarantor for my wife and I on a home loan. Can friends be guarantors, pending fiscal qualifications, of course. Thanks.

  • Hi Steve,
    We’re happy to assist if you’d like to engage us as your mortgage broker.

  • Lorna

    We have a gift of $45,000 from my father, my husband’s father is willing to go guarantor with a property valued around 1.5 million. However, we need a lender who accepts ftb payments as income, as I am currently studying not working, and husband earns $65000p/a. We need a loan around $350,000. Paid rent around $500p/w for last 2 1/2 years but no genuine savings. Do we have any chance, as only lender our current broker knows of that accepts FTB payments, will not do guarantor loans.

  • Hi Scott,
    Yes this can work, it’s an exception to policy and we’d need to interview your friends and make sure they are aware of their obligations.

  • Hi Lorna,
    Yes we have some lenders that will accept FTB A & B https://www.homeloanexperts.com.au/unusual-employment-loans/family-tax-benefit-home-loan/
    In most cases your children will need to be below 11 years old however there are some exceptions.
    Please give us a call on 1300 889 743 and ask for a guarantor loan specialist.

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  • Jarred

    If one of my parents is recently retired and another is still working, however they own their home outright, is a guarantor loan still possible?

  • Hi Jarred,
    Yes we can assist with this. A lot of lenders will not accept a guarantor loan for this situation however we have some lenders that can help. I’ll email you and cc a guarantor loan specialist.

  • Mick

    Hi we have been renting for 6-7 years paying $540 a week and we have a deposit butvwabt to use my wife’s parents as gaurantors, they live overseas and own their house outright, which lenders allow us to use my wife’s parents?

  • Hi Mick,
    The property for the guarantee has to be in Australia unfortunately. Is their property in Australia or overseas?
    If they’re overseas then I’d recommend they borrow against their home and lend this to you. Typically 25% is enough to cover a 20% deposit (which avoids LMI) and the 5% covers costs like stamp duty and conveyancing. And then we can get you a loan for the remaining 80% on your property.

  • Mick

    Hi, their property is overseas but they own it outright. I don’t have family to help me as both my parents have passed away.

  • Hi Mick,
    If their property is overseas then yes they’d need to gift or lend you a deposit. A guarantee doesn’t work for properties outside of Australia.

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  • David

    Hi
    We have $18000 in savings and my inlaws are giving us $20000 towards stamp duty
    The land we want to buy is $495000
    Just wondering what our options are ?

  • Hi David,
    I’d recommend that you get to $20,000 in savings of your own (almost there!) as then you’ll qualify for more lenders as you’ll meet their genuine savings requirements.
    The money for stamp duty will be a big help. But the problem you’ll face is that when you go to build you’ll need another 5% deposit again (depending on your state / first home benefits). If your in laws can guarantee your loan instead of giving a gift this would actually put you in a better position and you’d be able to build now.

  • bell

    Hi,

    My partner and I are looking on purchasing our first home. He is not considered a first home buyer as he helped purchased their home with his dad and brother.
    He is now relieved from that property. They offered to be our guarantor.
    I have been renting for more than 10 years and deposit wise we have only started saving.

    What are our options? Do we still have the option to borrow 105 % of the mortgage?

  • Hi Bell,
    Yes if they are you guarantor then you can borrow 105%. As it’s a little more complicated than usual as it’s your partner’s dad and brother being the guarantor it’s best to discuss with one of our mortgage brokers in detail and they can let you know your options. If you call us on 1300 889 743 and ask for Mike then he can assist you further.

  • Lauren

    Hi, my partner and I are looking at buying our first home. Neither of us have genuine savings but have a perfect rental history. We both have car loans and have always made payments on time. I don’t have a good credit rating as I have made many applications online for a loan in the past (I wasn’t aware this impacted on your credit score). Just wondering what the chances of my mum going guarantor for us would be? Her and my father both own their home. Let me know if you need any more information. Thank you.

  • Hi Lauren
    Yes we likely can assist but we’d need to see your credit history to be sure. The good rental history will help us a lot so please provide this to our broker as this adds a lot of strength to your application.
    I’ll email you and cc one of our first home buyer specialists who can assist you further.

  • Minerva

    Are we able to get guarantor mortgages if we’re buying commercial property, just as we do with residential property?

  • Yes, and it’s pretty much the same as with residential home loans. You can learn more about commercial property guarantor loans here:
    https://www.homeloanexperts.com.au/commercial-property-loan/commercial-property-guarantor-loan/

  • Gillian

    Hello, After some general advice if possible please. My husband and I live with my parents, we both work FT. We do not pay any rent, we had savings of $35k but recently decided to payout my car loan. As of now, we have no savings, no debt but no rental history either. My dad has said he is happy to proceed with being a guarantor for our home loan. They own their home with nothing owing, he works FT and so does my mother. Basically my question is – as we have no rental history will be unlikely to be approved for our first homeloan? or due to our history is there a chance we could get approval?
    We have also paid a different car loan in full within 3 yrs. Thanks for your time.

  • Hi Gillian,
    I expect we can get you approved as some lenders don’t require a rental history or any savings for a guarantor loan.
    However if you can provide evidence of the money you did save and then that you paid out a car loan this really helps us to choose from a wider range of lenders. Based on what you’ve written above it looks like you are responsible with your money and ready to buy a home.

  • Gillian

    Hello, That’s great news! Thanks so much, i was a little concerned after read the article above.
    By providing evidence of the money we had, what would the evidence be? Bank statements?
    Thanks again for your time.

  • You’d just provide statements for your savings from at least 3 months before when you paid out the car loan. Then show statements for the same period for the car loan. You can see the money paying off the car loan and this is excellent evidence that you are financially responsible. I’ll get our mortgage broker who specialises in guarantor loans to email you so if you’d like more info then please discuss with them.
    Best of luck with your purchase! You might find this article helpful as it’s your first home https://www.homeloanexperts.com.au/home-loan-articles/protect-yourself-buying-a-home/

  • Gillian

    Thank you so much. How exciting!

  • Anna

    Hello, I would like to know if a guarantor Home loan can work as a non recourse loan in a trust when 100% of it is secured against another property. We would be looking to finance 100% of a property in a trust. The property is worth significantly more than the purchase price. Thank you.

  • Hi Anna,
    Unfortunately no you wouldn’t be able to do that as a non-recourse loan. A non-recourse loan is only used in very limited circumstances such as for a SMSF loan or a low risk commercial loan >$10m for a large business.
    However we can structure the loan in different ways to achieve your objectives such as asset protection. We’d need to know more about what your plans are to assist.
    Please call us on 1300889743 and speak to Mohit as he is our trust loan expert. However he isn’t experienced in asset protection so ask him to refer to management for advice around the structure.

  • Jen

    Hi, wondering what our options would be with getting a loan. We want to buy a 40 acre rural property for approx $470,000, which shows as being in a medium risk postcode according to your postcode guide. We are first home buyers and would be buying to live in, not as an investment.

    My husband and I are both self employed as sole traders. I’ve been running my business for 9 years, consistently earning between $65-75k per year for that period. My husband has only operated as a sole trader for 7 months, currently earning what will be approx $60k per year. We only have about 6k in savings, but have a rental record of paying between $540-675 per week for the last 3 years.

    We have a car loan and each have a credit card with outstanding balance. My husband has a great credit rating with no defaults. My credit rating is currently average with 1 default that’s due to be removed next year.

    We’re assuming at this stage that we’d need a guarantor to get a loan given we’re self-employed, have low savings, the default on my credit file and also the size/location of the property we’d like to buy, is that right? We’d prefer not to have a guarantor, however my parents are in a good financial position and would consider going guarantor for us.

    They own a property (in my mother’s name only) in inner Sydney outright, valued in March 2016 at just over $1.5m, that they currently lease out. And they own a second property in the Hunter Valley (in my father’s name only) with mortgage of approx $300k, valued a few months ago at around $800k, that they lease as a holiday rental. They are both under 60 years old, my mum works part time (earns approx $30k per year from her job, plus approx $57k income from the Sydney rental) my dad works full time (earns approx $200k per year from his job, plus approx $75k income from the rental).

    Is our only option a guarantor? And if so, would my parents be accepted as guarantor?

    Thanks!

  • Hi Jen,
    Yes we can help with this. I’ll reply to some of your concerns below:
    – Location of all properties will likely be fine.
    – Default will be fine (depending on the structure)
    – Your parents situation is strong and they’d be seen as excellent guarantors.
    There’s a few options. But the easiest one is that we obtain a small loan for your parents on one of their properties and then they lend this to you as a deposit. We can then do a loan for 80% of the property value for you on the property that you buy.
    The advantage of this is that we can then go with lenders that are flexible with your credit history and have good rates as well. Whereas if we go with a guarantor loan the problem we have is that the lenders that do guarantor don’t always accept a problem with a credit file.
    We’d need to see your credit history to be sure. I’ll email you and cc one of our mortgage brokers who specialises in this area of lending.

  • Milly McCarthy

    Mill – HI, I’m going guarantor for my daughter. I have an investment
    home that I will put up as the guarantee. We’ve filled out all the
    forms and have used my licence and passport as ID. Now 2 days later I’m
    asked for my Superannuation Statement to be handed in as well. Not
    sure why I have to do this as the house is worth $800,000 unemcumbered,
    why do they need my super statement now. I’m not using my super as
    well. Besides that all my detailed information is on that super
    statement and if the paperwork goes astray and goes to the wrong hands,
    am not sure now. As it is I’m unhappy that I have to give them all my
    title deeds to the house that I’m putting up as guarantee – how do I
    know that all will be safe.

  • Hi Milly,
    Sometimes lenders want a superannuation statement because if you ever did have the guarantee called upon you could cash out your super to pay out the guarantee. They shouldn’t ask for it as it’s a investment property and they normally only ask for something like this if your home is being used for the guarantee. But banks will be banks and it’s best to just provide what they ask for.
    I wouldn’t be too concerned about the documents you’re providing. If your broker is a member of the MFAA or FBAA then they have all the insurances and dispute resolution body memberships necessary to ensure you are protected from any wrongdoing.

  • Milly McCarthy

    Thank you!

  • Cat Hetherington

    Hey
    My partner and I are interested in buying our first home. We have no genuine savings, he works full time, I work full time but am a casual, although have been in my job for over 8 years. No current loans and excellent rental history. My parents own outright both a house (brought for 110,000, worth around 350,000-400,000) and a shop (brought for 35,000 I think, unsure of worth now). What kinda of loan can we get if my parents go garuntor for us?

  • Hi Cat
    Yes it’s likely you cam borrow up to 105% of the purchase price with no LMI and great rates from a major lender. We’d need to complete a full assessment to figure out more. You can call us on 1300889743 tomorrow and ask for a guarantor loan specialist.
    Best to use your parents home for the guarantee. They wouldn’t allow their shop to be used.

  • Cat Hetherington

    Thanks for the quick reply. Will definitely have a chat to the parents and give you guys a call. What would be our options if we couldn’t get a guarantor?

  • Hi Cat
    A gift or saving a deposit are the best options. A personal loan can be used as a deposit in rare cases where you have a high income and no debts

  • Cat Hetherington

    Will my parents house have to be evaluated? How does that work?

  • Theron

    Can my friend be my guarantor in my home loan purchase?

  • Hi Theron,
    Lenders don’t accept friends as guarantor. That’s because, on paper, the guarantor is ultimately liable for your home loan should you default. So, friends, workmates or associates are not normally accepted as the banks want to make sure that the guarantor has a strong relationship with you, such as your Mum and Dad.
    In saying that, lenders normally can consider guarantees from immediate family members such as siblings, grandparents, spouses, de facto partners or adult children. Please call us at 1300 889 743 if you want to discuss this with one of our guarantor specialists.

  • Rooty

    I have a mortgage currently with CBA and my mother’s property has been used as a guarantee. It’s been more than a year and I’ve been making regular repayments and I think the value of the property has increased as well. Can I release my guarantor even if the loan value is greater than 80%?

  • Yes Rooty, and to do so, you’ll need to internally refinance your mortgage. If your bank isn’t offering you a competitive rate then it may be worthwhile to speak to us on 1300 889 743 and we’ll let you know which other lenders are suitable for you. Please note that different banks will value your home using different amounts. We can order an upfront valuation with several lenders which allows you to choose the lender with the highest valuation.

  • Vanessa

    Hi there, my partner and I are looking to get a guarantee loan from my father. He has a house with his partner, they are not married, will they still be eligible to be a guarantor to us if their house is in both of their names?

  • Hi Vanessa,
    Yes this is fine, however both him and his partner will need to be guarantors as they are both owners of the property.

  • Tyson

    Hi Team

    My Wife and I are looking at getting into the market for a cheap house, around $260K-$300K
    Just wondering how we are looking for getting finance approved using a Guarantor.

    Details as below:

    Myself:
    $85K base, $15600 Car Allowance (untaxed), Avg. Commission $30K

    Partner:
    $50K Base +O.T

    $2000 per month existing debts

    No Mortgages

    No dependents

  • Hi Tyson,
    Calculating borrowing power is now very complicated so we’d need a full application to assess it. However based on what you’ve put in it looks possible (rough calculation).

  • Rach

    Hi my husband and I got a home loan 6 years ago and ended up consolidating some loans using my mum as guarantor as we didn’t quite have enough equity, so now we have a guarantor loan of $530k. We’re looking at selling and buying a house and land pkg, prob get around $550k now but will have to pay agent fees so won’t make much. Can my mum change her guarantee over to our next place? Looking at borrowing around $450k. We both have average credit scores and a few debts including some tax which we keep on top of ok! Mum ownes her house outright (value $300k) but is between jobs right now can she still help us out?

  • Hi Rach
    You’d need to set up a new guarantor loan for the new property. Yes it is ok if your mum isn’t working however we’d need to assess your situation to ensure that there is a strategy to make sure that she is not put at risk. Also if you use a guarantor loan you need to commit to not taking out any future debts until the guarantee is removed. You need to pay principal and interest repayments to ensure it is removed as soon as possible, as what happened with your last property shouldn’t be repeated.

  • Ashleigh Gilson

    I am looking at getting a home loan, alone, at roughly 360k for a property. I don’t earn enough to get that high of a loan, even though I would definitely be able to make repayments. Would having a guarantor increase that purchasing power at all or is guarantor only good for covering LMI and deposit?
    Thanks.

  • Hi Ashleigh
    Yes you could improve your borrowing power with a guarantor that has a high income however this is not a simple structure and we would want to ask a lot of questions to make sure that the guarantor was not being put at risk and they are aware that they are expected to make repayments.
    1. Some lenders can do this where you can afford at least 80% of the loan yourself.
    2. Some lenders would require your guarantor to be a part owner of the property that you are buying

  • ally

    my borther an i bought a house for us to live in, he is only on the mortgage, due to at the time i was not working, i and with some help from my parents did put the deposit on that property.
    my brother has since moved out and wants nothing else from this property, i live in it and pay all costs, so i am wondering is there someway we can use the equity in the house for him to sell it to me and i get a mortgage, as it seems silly to pay another deposit again for the same house. He wants to sell it to me for what is owing on his mortgage. there is 157,000 on mortgage the house should be valued at around 250-260,000 . I work part time and i also have a tenant in the downstairs part of the house, as enough room upstair for what i need, they now pay 200 a week . thanks ally

  • Hi Ally,
    I’m not 100% clear on your question but we’ve dealt with similar situations many times before.

    If your brother doesn’t need to be paid out any money then you can just obtain a loan for $157,000 + any costs like stamp duty and organise a transfer into your name which you and your brother both sign.

    If your brother wants to be paid out some money (i.e. he contributed / made payments etc) then you can include this in the loan you get as well.

    You need to have sufficient income to be able to afford the loan and meet all other standard lending criteria.

  • ally

    Hi just so I understand I don’t need any sort of deposit for the loan, I just go to the bank and try to get a loan for what is owing on his loan , plus any costs as he doesn’t want to be paid out

  • Yes that is correct. When you talk to your bank you should refer to it as a ‘favourable sale’ as this is what our industry calls this situation.

  • ally

    Hi I just want to clarify, if I go to get a mortgage to buy my brother’s property. That I don’t need a deposit. So does that mean the equity is used as the deposit. So if he owes 157,000 that is all I need to get a mortgage for. As I don’t quite understand why I don’t need a deposit

  • Yes that is correct. Your equity is the deposit.

  • Ariane

    Hi,
    My partner and I are looking to get a house and land package as our first home. I earn about $60K full time permanent and my partner is a teacher which earns $80k but she is on temporary work. But she has been getting consistent work for 10 years with the same school.
    My parents have agreed to help us by being guarantors. as we have no savings for a deposit.
    We found a new development area that we would like to live in and even found some house and land packages that we liked.
    My concern is that I don’t have a strong credit score and may affect getting approved for a loan.
    I would like to know if bad credit will affect our chances of getting approved even though my parents are willing to be guarantors?
    Is it better to try and apply now or wait till I can get my credit score back up?

  • Hi Ariane,
    Yes your credit score can affect your ability to get a guarantor loan. However this is something we can consider on a case by case basis. We’d need to see the nature of the situation in full and work out the best options. Where it is a minor problem and you have something to help mitigate the risk (e.g. a strong rental history / you’ve paid off a loan recently) then this can help us to get an approval. Also there are some lenders that can consider a flexible approach.
    The priority for us is to look at your current spending habits and make sure that we are not putting your parents at risk. Secondly building a home + a guarantor loan is a difficult combination and you may find that this is quite complex. In most cases with a guarantor loan it’s best to buy an existing property.
    I’ll email you and cc one of our mortgage brokers who is a specialist in this type of lending.

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  • Hi Shjudd
    Yes this is possible. Some lenders will accept a guarantor who is retired as long as we are not putting them at risk.

  • Grace

    Hello, how difficult is it for someone who works full time freelance, paid in cash. I deposit money into my bank account every week. Between (1500-2000)? I also want to ask my dad to be my guarantor. He just bought a new house the other month so would that be an issue!

  • Hi Grace,
    There’s some lenders that can help Freelancers https://www.homeloanexperts.com.au/unusual-employment-loans/freelancer-mortgage/
    As a general rule:
    – If you have a 20% deposit (savings or gift) then we can help with a low doc loan
    – If you lodge your tax return in July 2018 and show your income we can help with a guarantor loan
    – Your dad can be a guarantor as long as he has sufficient equity https://www.homeloanexperts.com.au/mortgage-calculators/guarantor-loan-calculator/

  • Grace

    Thank you so much!

  • Emma

    Hi, my husband and I (we have 2 teenagers) earn combined income (PAYG) $217000/pa. My husband’s income will increase by $13000 in six months. We pay $675/week rent and would like to buy a house (approx $550000) but have no deposit. My parents are semi-retired and would act as guarantors. They have paid off their mortgage and their house is valued at approx $450000. Our monthly commitments (cars etc) are approx $2500 and credit card limit of $60000. My husband has a $11000 default on his credit report which he is paying off. Would we be able to borrow under these circumstances or are we better trying to save up for a deposit (hard when renting). Can our rent payments be counted in lieu of genuine savings?

  • Hi Emma,
    If you have significant debts at the moment then it’s best to pay these off first before buying a home. If your credit cards are not being used then reducing the limits will help a lot to get a loan. If your credit cards have more than $20k owing then it’s best not to buy now.
    A guarantor loan wouldn’t work for you due to the combined amount of debt and the credit history problem. However if your parents are willing to lend you a deposit then we can help you to borrow 90% of the property value on your own. This then limits the risk to your parents and enables you to enter the property market.

  • Emma

    Thank you. Would it be an option to Apply on my own with parental guarantor? My income $95k. Credit card limit $21k.

  • Hi Emma,

    That may be possible but likely not for the amount that you’re after. You wouldn’t have the borrowing power to buy a property for $550k. If you could reduce the amount then we can look at this on it’s merits and see if there is a solution. We also need to consider the overall position of you and your husband for our responsible lending obligations.

  • Dean

    Hi,
    I earn over $100k and my wife works as casual roughly 17k a year,we pay $670 P/W rent and both parents are retired and own there own home are we eligible for a guarantor loan.
    Cheers

  • Hi Dean,
    Yes you should be eligible Dean. Some lenders won’t accept a retired guarantor but we have others that can. Give us a buzz tomorrow on 1300889743 and ask for one of our guarantor loan specialists.

  • Dominic

    I’m planning to purchase an investment property. I can’t use the equity of my current property as it’s only been a year since I bought it and the value hasn’t increased much. Also, I don’t have enough savings of my own, so I wanted to use a guarantor. Is it possible to get a guarantor loan to buy an investment property?

  • Yes Dominic,
    You can invest in a property with the help of your guarantor. With a guarantor mortgage, you can borrow up to 105% of the property value. Also, note that you can apply to remove the guarantee once you have paid off part of your loan or your property has increased in value. Our mortgage brokers are experts in guarantor home loans. Please call us on 1300 889 743 or enquire online https://www.homeloanexperts.com.au/free-quote/ and we can go through your options with you.

  • Benzerman

    My partner and I have secured support from my parents to stand as guarantors for a home loan. They are both working, and have a home worth approx $500k with $130k owing on their mortgage. We are looking at buying a property with a purchase price of approx $650000 (combined income $205k). We’ll be paying all other fees upfront in cash. Regarding securing a home loan, would our situation be favourable to any lenders?

  • Hi Benzerman,
    With a guarantor pledging their property for your purchase, you could be able to borrow up to 105% of the property value. With a guarantor home loan, you don’t need a deposit and you can save money by not having to pay any Lenders Mortgage Insurance (LMI).

    Based on your details, we could help you and we have some lenders on our panel who can assist you. Our mortgage brokers are experts in guarantor home loans. Please call us on 1300 889 743 or enquire online and we can go through your options with you.

  • nia

    Hi
    I want to buy property myself roughly about 400k, I earn $75000/pa
    I have property overseas , can I use that property as mortage here?
    Or my parents have property worth 2M overseas, can they act as guarantors?
    I currently have only 5% of the deposit for this property I am looking at
    Current debts – $600 /month – Car Loan
    No rental expenses

  • Hi Nia
    Only properties in Australia can be used for a guarantee. However you can borrow against your property o/s and then bring the money to Aus to assist with your deposit.
    If you have a 5% deposit and it is genuinely saved then you can qualify for a 95% home loan https://www.homeloanexperts.com.au/no-deposit-home-loans/95-percent-home-loan/
    However if you have a larger deposit then you can pay less in LMI https://www.homeloanexperts.com.au/lenders-mortgage-insurance/lmi-calculator/

  • Judy23

    What is the least LMI that I have to pay for a home loan. Is there any way I can avoid the LMI altogether? Sadly, I don’t have anybody who could guarantee for my purchase. :(

  • Hi Judy,
    If you are borrowing up to 85% of the property value, a few lenders might waive Lenders Mortgage Insurance (LMI) if you meet their conditions. Moreover, we might be able to waive LMI for you up to 90% depending on your profession and if you meet a few criteria. You could try our LMI calculator https://www.homeloanexperts.com.au/lenders-mortgage-insurance/lmi-calculator/ and find out the lowest LMI you have to pay for your home loan.

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  • Nicols

    My mum is going to guarantee our home loan. Do we still require any deposit for the loan to be approved?

  • Hi Nicols,
    Guarantor loans allow you to borrow up to 105% of the purchase price, however many lenders still require you to have 5% in genuine savings. It is money that you have saved yourself. Speak to us on 1300 889 743 to find out which lenders do not require genuine savings.

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  • Lib

    We have a home loan already, but would like to build a self-contained granny flat on the property and make some other improvements (renovate kitchen, open up the inside, close under the house, build under the granny flat, power the shed, etc etc) – what are our options with this kind of loan? Our current loan is around 80% of the LVR (unimproved value). I have parents who can guarantee the loan if needed. We have some savings (~$10k), however I would not want to put them towards the renovations as they are put aside for the kids.

  • Hi Lib,
    Usually, lenders allow you to increase your loan for up to 90% of the property value; anything above that you probably need to refinance your mortgage to another lender. Also, they’ll seek evidence of the construction. If you want more than that and need to involve a guarantor, then do give us a call on 1300 889 743 and we’ll let you know your options.

  • PD

    Good afternoon,

    Due to my mother’s need to downsize her property, she has requested to be removed as Guarantor of my current property which I reside in with my wife. Can I replace my mother with our in-laws as Guarantors on my existing loan or will another loan/refinancing be the only option available?

  • Hi PD,
    Usually, replacing one guarantor with another is unheard of, to be honest. You could either apply with the same bank and remove the guarantor (it’s easy if the loan amount is 80-90% of the property value). Even if you want to refinance your loan to another bank, then firstly you need to remove your mother as a guarantor and then could add your in-laws in the new loan. Call us on 1300 889 743 and speak with a guarantor mortgage specialist and discuss about your situation in detail.

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  • Norton

    My son is asking me to give a guarantee for him to buy a home. But I’m not too sure owing to his poor financial records. Is there any alternative to a guarantee? I want to help him as well.

  • Hi Norton,
    If your son is struggling to save a deposit but you want to avoid the risks of acting as his guarantor, a parent assist home loan may be better suited to your situation. With this loan, you can borrow up to 100% of the purchase price plus the costs of completing the purchase and your son doesn’t require genuine savings. He can also avoid Lenders Mortgage Insurance (LMI) if he can reduce his Loan to Value Ratio (LVR) to 80%.
    You can learn more about this type of home loan here https://www.homeloanexperts.com.au/genuine-savings/parent-assist-home-loan/. Call 1300 889 743 to speak with one of our experienced mortgage brokers.

  • Merrideth

    I’m looking to finance a house with my spouse which is valued at $550,000. We have a combined income of $180,000 and our credit card debts are approximately $75,000. We don’t yet have a 5% deposit. We are at an initial planning stage, I was wondering if it would be better for me to transfer the credit card debt to a personal loan?

  • Hi Merrideth,
    In case of a low deposit or no deposit, one can also opt for a guarantor loan or a gifted deposit. If you can have your parents guarantee your loan or arrange for a gifted deposit, you could borrow up to 100-110% of the value of the property to consolidate any personal debts such as credit cards.

  • Lauren

    Hi. We want to refinance our home loan. Our current mortgage is $770,000 and we bought the house 3 years ago for $1,035,000. My spouse has a perfect credit score but mine has 2 enquiries that seem to be causing an issue with being able to refinance, however there are no defaults on my report. Are we able to have my parents as guarantor to be able to refinance?

  • Ash Smith

    Hi,
    I earn $86k a year. Single father of 3. My maintenance payment pays my ex partner/my car loan. Which is $1k a month.
    I have savings of around $10k. Personal loan total $28k as I consolidated debt to have only one monthly payment. Am I able to borrow enough to consolidate the personal loan into home loan aswell?? My parents own there property so can use them as a guarantor. What are my options?? I would like to borrow around $440k which would cover personal loan aswell

  • Lynsey

    Hi,
    Is there a limit on the proportion of the value of the guarantor’s property that can be utilised as guarantee?

  • Hi Lynsey,
    Guarantor loans are secured by both the property you’re buying and the property owned by the guarantor. Generally, a guarantor loan is structured as 80/20, 80% being the property you’re buying and 20% being the limited guarantee secured on the guarantor’s property. You can use our guarantor loan calculator to find out exactly what the ratio will be here: https://www.homeloanexperts.com.au/mortgage-calculators/guarantor-loan-calculator/

  • Kenneth

    Hi, I’m an uber driver making $ 750 – 900 a week. I’m looking to purchase a property worth $430,000 and my parents are willing to be my guarantor. I’ve saved up about 10 grand but if possible I would not like to pay a deposit. Can the banks use the FHOG as my deposit instead?

  • Hi Kenneth,
    Generally, first home buyers applying with a guarantor may be eligible to borrow up to 105% of the property value without a deposit. The extra 5% covers the purchase completion costs including Lenders Mortgage Insurance (LMI), which can be thousands of dollars depending on how you’re borrowing.

    The First Home Owners Grant (FHOG) in your state can be used as part of the deposit if you’re eligible for one. However, just the FHOG might not be sufficient funds to cover the deposit.

    I assume the reason you’re asking about FHOG as a deposit is because your parents are only able to provide a limited guarantee. It’s best to discuss with one of our mortgage brokers what your contribution will be to the purchase and how much equity your Mum and Dad are able to leverage to secure your mortgage.

  • Leslie O’ Rourke

    Hello! I’m looking to purchase a property in Qunaba, Bundaberg, with which I want to generate some revenue through rent! I’ve been doing some research lately and I feel like my parents could help me out by acting as my guarantors. I wanted to know if it was possible to buy an investment property with my parents as guarantors!

  • Hello Leslie,

    Only two or three lenders in Australia will accept no deposit investment loans supported by a guarantor.

    Purchasing one investment property should not be an issue. However, buying multiple investment properties is not normally accepted. This is because the guarantor is taking an unnecessarily high risk whereas the borrower is making all of the potential profit.

    If the guarantor is in a strong financial position then multiple investment properties may be considered.

    Please call us on 1300 889 743 and one of our brokers can complete a full assessment of your situation.

  • Hi Ash,

    The fact that you have some savings of your own will really strengthen your application. While you can certainly consolidate debt into your home loan using a guarantor mortgage, you can generally only consolidate up to 5% of the property value.
    Working backwards from what you’ve mentioned, it appears the full cost of the property is $412,000 or so. If this is the case, you may only be able to reasonably consolidate around $20,600 in debt. You also have to bear in mind the costs of purchasing property such as stamp duty and legal costs.
    Also, this is assuming your Mum and Dad are eligible to act as guarantors.
    Your living expenses, namely your ongoing payments to your ex partner and for your car loan, may also effect your borrowing power.
    It’s best you give us a call on 1300 889 743 or complete our online enquiry form to discuss your situation in full with one of our mortgage brokers: homeloanexperts.com.au/free-quote/
    We can fully assess your situation and let you know which solution may be right for you. In some cases, you may be better off further reducing your personal loan before applying for a guarantor loan.

  • Hi Lauren,
    Just based on what you’ve told me, it looks like you’re considering a guarantor option in order to use your parents’ equity and reduce your Loan to Value Ratio (LVR). This can certainly reduce your risk with the bank. However, guarantor loans are generally only available to first-time buyers and not for the purposes of refinance.
    A better option would be simply to apply with a lender that will consider your multiple enquiries. As a specialist mortgage broker, we can even negotiate an exception to standard policy with some lenders if you can provide reasons why you made multiple enquiries in a short span of time.

  • Timothy

    Hey! So my bank tells me that I need to have at least 5% of the property value in my account as genuine savings to even apply for a loan. The house that I’m planning on purchasing is priced at $600,000. It just so happens that I’m around $8,000 short of reaching $30,000. Can you explain to me why Australian banks are so strict with their genuine savings policies?

  • It is understandable that you would be surprised with just how strict lenders are with their genuine savings policies. The reason is due to their Lenders Mortgage Insurance (LMI) providers. Loans that are for over 80% of the property value are insured by an external company. This reduces the risk to the lender in the event that you can’t repay the loan. If a lender has to make a claim on a mortgage insurance policy as a result of a customer not paying their loan, then the mortgage insurer will audit the original approval. If they see that the lender didn’t have evidence of exactly 5% or more in genuine savings when they approved your loan, then they won’t pay the insurance claim! The other reason for genuine savings is the nature of saving the deposit i.e. regular deposits into a savings account ,accumulated over time. Borrowers who have saved a deposit in this way reflect their reliability as soon-to-be mortgage holders making regular mortgage repayments.

  • Lois

    Hi, I’m looking for a first home buyer loan. 20% deposit is a hard target so, I was wondering if my parents who live in the UK can be my guarantors or do the parents have to live in Australia as well?

  • Hi Lois,
    The property being used as guarantee needs to be in Australia and it is best that they too live here for a guarantor home loan. If this is not possible then you could also use a financial gift from your parents as the deposit, otherwise known as a gifted deposit.

  • Bart

    Hi,
    Is there a limit on the proportion of the value of the guarantor’s property that can be utilised as guarantee?

  • Hi Bart,
    Guarantor loans are secured by both the property you’re buying and the property owned by the guarantor. Generally, a guarantor loan is structured as 80/20, 80% being the property you’re buying and 20% being the limited guarantee secured on the guarantor’s property. You can use our guarantor loan calculator to find out exactly what the ratio will be here: https://www.homeloanexperts.com.au/mortgage-calculators/guarantor-loan-calculator/

  • Katlyn

    Hi,
    We don’t have a deposit but have been renting for the last 8 years and counting. We’ve found a property that we really like for $365,000 and the mortgage repayments would be less than what we pay in rent. Preferably we would not want to use a guarantor. We could arrange for a gift though, will that work as the minimum deposit requirement?

  • Hi Katlyn,

    Yes, a 5% gifted deposit could work. Most lenders require that the gift be from your parents with a signed gift letter stating that it is an unconditional gift and not a loan. If other members of your immediate family such as your brother or sister, your grandparents or your spouse provide you with a gift, it is usually accepted after looking at your case.

  • Taine

    Hi, if you use a guarantor, are they committing to just the deposit amount or the full loan amount? For example, if the loan is for $500,000, what is the commitment of the guarantor?

  • Hi Taine,
    When using a guarantor, you can have a limited guarantee in place wherein they are guaranteeing only the deposit and not the full loan amount. For a loan amount of $500,000, the commitment/limited of the guarantor would only be $125,000.

  • Tobi

    Hi,
    I’m trying to help my daughter to refinance her mortgage. She currently holds the deeds in her name but has her ex-partner on the mortgage. He is willing to take his name off the loan and I’ll be the guarantor for the loan. ANZ, her current lender, told us that even though she has enough income to service the loan on her own, they will not let me go guarantor as I’m retired and no longer working. Does she need a deposit in this situation?

  • Hi Tobi,
    If you’re going guarantor on the mortgage, a deposit may not be required if you have enough equity in your property to cover the guarantee. There are a few lenders who may be able to assist with retired guarantors as long as they obtain legal advice prior to agreeing to become guarantors for the mortgage. You will have to provide a written exit strategy, you can learn more about this here: https://www.homeloanexperts.com.au/home-loan-articles/exit-strategy-in-mortgages/

  • Leopold

    Hi,
    My wife and I are saving up a deposit and planned to start looking for a house sometime next year. However, we found an ideal property for us in Geelong, close to currently where we’re renting. My parents have agreed to guarantee the loan, but I’m concerned that we may have to pay a higher interest rate, seeing as we have no deposit?

  • Hi Leopold,
    The short answer is no. The interest rates are particularly competitive right now when it comes to applying with a guarantor securing your home loan. Banks are cutting each other for more business as their home loan books have shrunk and there is simply less demand for owner-occupied home loans. At the moment, we have several lenders on our panel that are offering significantly reduced fixed rates. With a guarantor home loan, you’ll not only get a great interest rate you’ll also save money by avoiding the Lenders Mortgage Insurance (LMI) altogether.

  • Alexis

    Hi, does using a guarantor affect my ability to borrow money in the future? Thanks.

  • Hi Alexis,
    Using a guarantor will not affect your ability to borrow money in the future. The guarantor is simply using his property in lieu of the deposit. Your borrowing power will solely be dependent on your income and expenses and the affordability of the loan in the future. As long as you can demonstrate the affordability and have good conduct on your current debts, it should be fine.

  • Shayne

    Hi, I don’t remember us having to wait 3 days to review the indemnity/guarantee documents the last time we went guarantors for one of our kids. What other changes have been made to guarantor home loans that I should be aware of?

  • Hi Shayne,
    The 2019 Code of Banking Practice is coming into effect from 1 July 2019 and many banks have already started rolling out these changes as part of their responsible lending practices. One of the new guidelines is that guarantors must be given a minimum of 3 days to review the documents and consider their obligations before signing and returning the documents. Other changes include: a cooling off period after signing the guarantee documents, notification to the guarantors if the borrower is under financial difficulty and guarantors are encouraged to seek legal advice before signing as is currently the case among others.

  • Creed

    Hi there, quick question before I take the next step. The property is priced at $620,000 but I can only afford to service $496,000 which is 80%. My parents are willing to go guarantor for the other 20% which is $124,000. My question is, do I make repayments on the $496,000 portion or the full amount? Thank you.

  • Hi Creed,
    You’ll be making the repayments on the full loan amount i.e. $620,000. The guarantor is simply providing their property as security in lieu of the deposit. That is to say, with a guarantor, you can purchase a property without a deposit however, your income will still need to service the mortgage on its own.

  • Desiree

    Hi, my partner has a bad mark on his credit file due to an old credit card, it’s paid off now. We’re looking to buy a house but we have no deposit. I can ask my parents to be the guarantors, will that be acceptable to lenders? I haven’t yet found an answer. Can you help?

  • Hi Desiree,

    Most lenders will not accept any adverse credit history with guarantor home loans. Unfortunately, there are rarely any exceptions to this policy. You’ll need to provide strong reasons (divorce, serious illness etc) and sufficient evidence for the default or if the default is less than $500 and was paid more than 6 months ago, then we may be able to get you a guarantor home loan.

    The other option is to arrange a small mortgage on the guarantor’s property and they either lend or give this to you as the deposit. Depending on how bad the default is we could get you up to 80% of the property value as a mortgage, thus avoiding the problem altogether.