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Guarantor Home Loans

Guarantor home loans are now the only way to borrow 100% to 110% of a property’s purchase price in Australia. After the global financial crisis, traditional no deposit home loans were withdrawn from the Australian mortgage industry leaving guarantor home loans as the only no deposit option.

With the help of a guarantor many Australians are getting their foot into the property market early. What attracts home buyers to these types of mortgages is that they don’t require you to pay lenders mortgage insurance (LMI) as well as removing the need to save a deposit! Another feature that makes this home loan option attractive is that the mortgage will also cover the purchasing costs (e.g. stamp duty and other fees).

Buyers who decide to go this route will generally only need to have as little as $3000 to purchase a property.

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.

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.

Guarantor mortgage structure

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 can I borrow?

  • 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.

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 if my parents already have a home loan?

That’s ok, 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.

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.

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.

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.

Do I need to be a first home buyer?

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.

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.

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 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.

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, however you may have to pay LMI to achieve this.

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.

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 are buying a home, have an excellent income, but no deposit. The guarantor is also called an “equity guarantor” by some lenders.

Security & 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.

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.

What are the risks of being a guarantor?

On paper, a guarantor arrangement means you, as the guarantor, are ultimately liable for your child’s home loan should they default. This suggests that the banks will move quickly to sell your home to cover the remaining debt.

The reality is that banks actually try everything to solve the problem before making the drastic decision to sell your home.

The reason is that there is often a significant process involved in trying to sell your home to cover your child’s mortgage and, when you take into account the time and cost of bank of employees, it’s often not worth the hassle.

Instead, lenders would rather your child keep paying their mortgage so they’ll want to find out why they’re having trouble managing their repayments and whether a solution can be found.

For example, if your son or daughter has lost their job but they’re a professional in a good industry, lenders take into the consideration the fact that they have a good chance of getting another job soon.

In the meantime, the bank may reduce their mortgage repayments for a certain period of time until they are able to bring in the second income to cover the home loan repayments.

Should the borrowers still not be able to make their home loan repayments, lenders will always take action on the borrower’s property first before making the guarantor liable to pay out the outstanding debt, bearing in mind that repossession will only begin once the mortgage hits its ninth month of arrears.

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

Remember, you, as the guarantor, are only taking on a limited guarantee which means you’re 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 your limited guarantee is for only $210,000, you’re only liable to cover the outstanding mortgage up to $210,000.

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

However, if your child’s property only sells for $440,000, you’ll have to cover up to $210,000 with equity in your property to cover the shortfall but you won’t be liable for the remaining $50,000.

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

If you don’t have the equity or enough savings to cover this amount, you may be able to cover the outstanding debt in the following ways:

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

If all of these avenues have been exhausted, banks will sell your home but will only take enough to cover the home loan up to your limited guarantee. The rest of the sales proceeds will go to you.

Choosing to act as 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.

Why do you need expert advice?

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.

Why choose a guarantor loan?

Recently, no deposit home loans have been withdrawn from the market making 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 do not 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 loans. Please call us on 1300 889 743 or enquire online and we can go through your options with you.

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 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.

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.

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.

By asking his parents to act as guarantor on his mortgage:

  • 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 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.

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 to 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.

Still have questions? Feel free to comment below and we’ll get back to you as soon as possible.

  • Rafa Orellana

    I heard from my mates that now anyone in Australia with a property can be a guarantor. Is this true?

  • Yes, it may be possible if they own a property in Australia.

  • Kylie Taylor

    What if your guarantor is in NZ? Is this possible?

  • Yes, the guarantor can be NZ as long as they have a property in Australia. If the property is in New Zealand or anywhere else outside Australia, then you can’t use that person as the guarantor.

    How can you get around this? They can borrow in their country on their property and then lend that to you as a deposit. You can then apply for a no genuine savings loan

  • Jas Florance

    Can you go for a low doc loan with a garuntor?

  • Hi Jas, this is possible only in exceptional circumstances. We would need to see some evidence such as BAS statements, bank account statements or an accountants letter to verify your income. This would be with one of our specialist lenders.

  • Rik Kay

    My exdefecto partner and I own a house that we are keeping for our son. Can I use this house as guarantor if my ex agrees to be Guarantor?

  • Yes, Rik Kay. If your ex partner agrees then it is possible however they would need to seek financial and legal advice.

  • Fiona

    Hi. I’d like to go guarantor for sons home loan using the family equity loan and use a rural property that has an old church on it that has no loans attached . We spoke to commonwealth bank and they said we may not be able to use it as it dosent have occupancy certificate and then mentioned something about commercial .. loan or what i dont know.. any suggestions on how to help loan?

  • Unforunately this is the same answer that that all lenders will give, as they take security which is standard as support. A Church is a specialised security and as advised there is no occupancy certificate as you cannot live in a church.

    We may be able to find a commercial lender to assist however this is unlikely.

  • Sara B

    My husband is discharged bankrupt (discharged 7 months ago) we pay high rent & therefore have struggled to save deposits, if we had a guarantor (his sister) would lenders still lend to us considering his bankruptcy history & no deposit? We both work & can easily service a loan as we have with high rent.

  • Hi Sara,
    This is possible however it isn’t easy. There are a few options for you:
    – Buy the property in your name only, if you have a high income
    – Use a specialist lender that can consider your husband’s credit history
    – Wait until he has been discharged over 1 year and then there are more lenders available.
    Please keep in mind that most lenders require the guarantor to be your parents. Not all lenders will accept your sister as a guarantor. Your Guarantor must own a property in Australia to be accepted.
    Thanks and good luck!

  • Donna

    my husband and i have no deposit for a house. yet my mother is prepared to go guarantee for us as she owns her house. she is retired and on a pension with her husband who is on gold veteran card. is this possible

  • Hi Donna,

    Although most lenders require guarantors to be working or to be self-funded retirees, some of our lenders will accept your parents as guarantors. You and your husband will need to have stable jobs and a good income.

    Feel free to contact us if you’d like some more help. Thanks and good luck with your purchase.

  • Breanna W

    I don’t have deposit for a house but my mother is prepared to go guarantor for me. My mothers only concern is that she lives in a rural area (Merriwa, NSW) and thinks maybe she can’t be guarantor for me because of this reason. Is that true?

  • Hi Breanna,

    Merriwa NSW 2329 is considered to be a higher risk as it is a small town. You can check different locations using our calculator

    For some lenders this will be a concern, for others this will be ok. If she lives in town we will definitely be able to help. If her property is outside of town then it depends on the property size. If it’s under 50ha then it’s likely we will have a lender that can assist.

  • ben

    Hi, I have recently inherited a 2 bedroom apartment in hurstville nsw. I have yet to get my self into the property market and would like to use this opportunity to do so. I dont want to sell it rather use it as collateral, I have enough cash to cover stamp duty, would i also need a deposit to secure a home loan or could i use the apartment as security?

  • Hi Ben,

    That should be no problem. You can use your apartment as security for a loan to buy another property. You can borrow the full amount if you like, and put your cash sitting in the loan account so it is accessible if you need it later.

    What can catch you out is that some lenders charge you a higher interest rate if you have an investment property as security for part of your loan. I’m assuming you’re going to rent out your unit. However some of our lenders will give you home loan rates and a significant discount.

    Good luck with your purchase.

  • Jessica Woods

    Hello, I’m looking at entering the property market with my partner. We have enough saved up for 5% and my parents are happy to go guarantor for us. I’ve heard that they can only help us out if we are buying an existing property. Can they help us if we are looking to buy land and build from a land package or can they only help if we are buying an existing home?

  • ben

    thanks for the reply
    ok so to borrow the full amount of a loan at say 850k would this require my entire property being held as security or just a portion of its value?

  • Hi Jessica,

    A guarantor loan can be used for construction, however it needs to be set up correctly. I’d recommend that you keep your 5% deposit aside in case there are unforeseen costs during construction. Then borrow the full cost of the land and construction. When it’s complete you can put your 5% into the loan if you like.

    Where most banks go wrong is that when they do the land loans they don’t setup the guarantee in a way that allows you to build later. Our brokers know how to prevent this problem so just give us a call on 1300889743 and we’ll help you out.

    You may also like our page on construction loan tips

    Good luck with your build!

  • Adriane Standfast

    Hey, what is considered an acceptable income for one of these loans? As in what is classed as low and high income.

  • Hi Adriane,

    There’s no simple answer to that question as it’s all relative to your situation. That means it’s relative to your debts, number of children and age. You can use our borrowing power calculator to get an idea of how your situation is assessed by a bank

  • Mic B

    Can my mate who owns a unit be my guarantor?

  • Hi Mic,

    Almost all lenders require the guarantor to be your parents. One or two accept other relationships such as grandparents, aunts, uncles, brother, sister or a friend. So it is possible if your friend has enough equity in their property, but we’d need to do a full assessment to be sure.

  • Chris

    Hi, my name is Chris. My husband and i are looking into building a new home but have about $30,000 in personal loan and 19 credit enquiries on my credit file in an attempt to apply for debt consolidation and car loan. My husband has been unemployed for about 9months prior but now has a stable paying job and we are slowly making our repayments.

    My mother has offered to be a guarantor for us. She has a mortgage on a house worth $600000 and owes less than 100000$ on this. What are the chances we will get approved if we apply for this?

  • Hi Chris,

    It’s likely that you’d need to show a strong history of stability for us to help you to get approved. What that would mean is waiting approx one year so that your husband has a year in his job and you have no enquiries on your credit file for one year. The reason for this is that your credit score would be low due to the unsecured debt and number of enquiries.

    You could potentially buy now if your mother refinances her loan and increases it so that she can lend you a deposit. You could then borrow 80% of the property value and a couple of our lender would consider your application. The goal would be to refinance your loan in approx 5 years time and pay out the loan from your mother.

  • Sherie

    Hi. My name is Sherie. My husband and I are looking to buy an established home within the Northern Suburbs of Adelaide SA. I have worked for my current employer for just under two years. I started Permanent Part-Time and now full-time since January 2016. My husband is on incapacity payments from Department of Veteran Affairs since 2012. Total fortnightly income Nett $3282. We do not have any savings due to getting married in February 2016. My husbands Uncle that raised him has offered to be guarantor and has mortgage for his property in Alice Springs NT which is valued $350k. We are looking for a loan around $220k.
    My credit file is good and my husbands average. What would be our chances if we applied for the loan?

  • Noel

    Hi, my partner and I want to purchase our first home. We were wondering if it is possible to have 2 guarantors providing security from separate properties (i.e each of our parents being a guarantor). My parents property is worth 1.1M with approx 200k owing and her fathers approx 400k with 80k owing. We have both been in our jobs for over 12 months, myself being a member of the defence force have a service agreement of minimum 6 years. However we have little savings, due to joining this relationship with previous debt, however have already consolidated these debts with success and are on track to have them paid off by may next year. We are looking at properties listed at 450k-480k and were looking to mortgage 500k to be able conduct minor renos immediately and cover part of the upfront cost. Does this sound like something that is possible?

  • Keryn Lynn


    I am looking to purchase a property using my ex husband as a guarantor (he owns his house outright). I am a teacher and earn approx $1100 a week and have been in the same job for 2 years. I want to buy a property to the value of approx $370k and also want to consolidate around $35k in debt. I unfortunately have no savings. What are the chances of me securing a loan?

    Thank you

  • Hi Keryn,

    Technically this is possible however we would need to assess this on a case by case basis. It would be likely to be approved if the debts were all paid on time, that you are currently renting with a good payment history and you have a clear credit history. It would likely be declined if there were missed payments.

    While it is unusual to have an ex-husband as a guarantor we have approved some loans like this before where couples have had an amicable divorce and they are seeking the best outcome for their children. We will need to have an in depth discussion with your ex and potentially we will need a written statement from him confirming the circumstances.


  • Hi Noel,

    Yes it is possible to have two guarantees to support your loan, however it’s rare that we’d recommend it. While it’s common for both parents to want to be involved to be fair or for other reasons it actually just complicates things. I would recommend you just have one property owned by one of your parents to be used for the guarantee.

  • Hi Sherie,

    This should be fine. Few lenders will accept an uncle as a guarantor however we have a few options for this. Aside from that your situation looks like great.

  • Sherie

    Thank you. I have spoken with my husband about his credit file. We have requested a copy from Veda to see what we are up against. I will have to touch base in 10 days once he has a copy of his credit file

  • Carla

    Hi there.
    My husband and I own our apartment and are paying interest only on the loan for another 2.5 years ($412,000 owing until we begin paying principle+interest). We earn about $8500 a month with out current interest-only mortgage repayments being $1250/month and car loan repayment of $500/month.
    We have $40k in savings. We want to purchase a second property for around $650k (a family home – possibly buy land then build) and keep our current apartment as an investment which will get back $300-$350/week in rental return (?cover the mortgage repayments).
    My parents have offered to be guarantors for us and own their home which would be valued around $1.5m-$2m (they own it outright).
    With them being guarantors, would we be able to borrow the entire $650k and keep our current place and rent it out?

  • Hi Carla,
    Thanks for the detailed info. Yes we can assist with this. You can borrow the full purchase price plus stamp duty and keep your $40,000 in an offset account in case you need it later. We can also extend the interest only period on your current property as it is becoming an investment. It makes sense to pay off your other loans off first before paying off your current loan as it will be tax deductible.
    Please call us on 1300889743 and ask for one of our guarantor loan experts.

  • Carla

    Ok great for getting back to me. Would this still be the case if we chose to buy land and be owner-builders?

  • Very few banks lend to owner builders. When combined with a guarantor loan it’s even less. Some of our brokers specialise in owner builder loans however we find in most cases customers have significant problems with this type of construction so we’d recommend that you avoid it.

  • Emma

    I (24yo) am moving to Qld to live with my partner (25yo) and his parents later this year and we are considering purchasing our first home together next year, rather than renting. He is earning $800+ a week at his full time job, and I will have either a casual or part time job whilst studying. Depending on my earnings, I may also be receiving ‘living away from home allowance’ from Centrelink which is approximately $455 a fortnight.

    Being first home owners and naming our parents as guarantors, how high are our chances of being granted a home loan given our circumstances? Also, if possible, approximately how much would the repayments be on a $300k property?

    Thank you

  • Hi Emma,

    If your parents provide their property as additional security then the bank will be ok with you having no deposit. The main concern i your income. $800 / week isn’t sufficient to support a $300k loan and LAFHA isn’t acceptable to all banks. I would recommend that you seek a part time job as we can get this income accepted once you have started. Whereas many lenders want a 6 – 12 months history as a casual employee.

    You could buy the property before the move if your income is higher now. We’d need to assess your likely future income as well to make sure you don’t get into financial hardship when you move to QLD.

    P.s. I hope you enjoy the sunny weather :)

  • Emma

    Thank you so much for your advice :)

  • mjt

    Hi, I am 41, single and renting. I have $95k in super. no deposit, and about $27k in debt which includes a car. I would like to buy a home about $340k. I earn $73k per year and have recently changed employers. How can I get out of the renting and into buying?

  • Hi mjt,

    If you can show a perfect rental history, a perfect repayment history of your debts, that your income is stable and you have a guarantor who owns a property then we may be able to assist. However it is likely that lenders would have concerns over your ‘income to asset ratio’. They usually expect that by age 40 you’ll have savings or a house already. We’d need to answer that concern as well.

    Consider cutting down your expenses, making extra repayments on your debts, make sure you are on time with your repayments and then when your debts are paid off you should qualify for a guarantor loan. Small debts can be consolidated with a guarantor loan to buy a property with no deposit, in exceptional circumstances.

  • Damien

    Hi, looking to build a house with land looking around 400k. Married with kids I earn 110k a year and wife earns around 30k. Have debts around 54k. With a guarantor how much could we lend

  • Hi Damien,
    Yes this is a possibility. The main concern is your debts of $54k. If they are mostly car loans this is likely ok. If they are mostly credit cards then this will not be acceptable to most lenders. Please call us on 1300 889 743 to go through your situation in more detail.