Get into the property market by buying a home together

A family mortgage can benefit both children and their parents either get into or stay in the property market.

With the use of a guarantor loan, you can essentially help each other to buy a home or even an investment property together.

Benefits of a family mortgage

After the Global Financial Crisis, several no deposit loans were withdrawn from the mortgage industry in Australia.

Family mortgage are still available though and there are a number of benefits:

You can speak with one of our mortgage brokers who specialise in family mortgages on 1300 889 743 or by completing our free online assessment form.


How are family mortgages structured?

There are a number of ways a family can buy a home or investment property together.

For instance, a son or daughter buying a house with the help of their parents, an elderly couple buying a home with the help of their son or daughter and so on.

Each situation has a unique structure and is viewed differently by different lenders.

Parents buying a home for their adult child

Parents often help their adult child buy a property if their child is still a student or is just starting out. They do this by providing their property to the lender as a guarantee for the loan.

This is commonly known as a guarantor home loan.

Ultimately, the parents will be liable if their son or daughter can’t meet their home loan obligations. They will have to either pay off the loan in their child’s place or sell their property entirely.

With a guarantor loan, you can borrow 100% of the property price plus an additional 5% to 10% for associated costs such as legal fees and stamp duty.

Adult children buying a home for their parents

Lenders often tend to restrict the borrowing power of mature borrowers.

For example, if you’re over the age of 40 then the lender may lower your loan term. This is done to make sure that you’ll repay the home loan before you reach the standard retirement age of 65.

If you’re over the age of 50 then it may almost be impossible to get a loan approval. You will be required to provide extensive home loan documents and an exit strategy to show that you can repay the loan before you retire.

In this situation, you can ask your adult children to help you buy a home or investment. This works similar to a guarantor loan.

The adult children place their property as a security or guarantee for your mortgage. They will ultimately be liable if you default on your home loan and will have to pay off your mortgage for you.

This gives you a better chance to get approval for a home loan.

A family buying a home together

Some lenders allow families to buy a home or investment property together.

In this situation, the parents often provide equity from their property or provide the deposit and the children provide their income to cover the repayments.

The loan can also be split into multiple accounts and each member can make their own repayments in their respective accounts.

These structures can be used with other members of the family as well. Call us on 1300 889 743 or fill in our free online assessment form for more information on how you can borrow together with your family.


Who can I buy with?

Most banks will only allow you to buy a property with your parents.

Some banks may consider immediate family members such as siblings, grandparents, uncles, aunts, spouses and de facto partners. Friends, workmates and associates aren’t normally accept by the banks.

You’ll need to meet additional lending requirement if you’re looking to buy a home with someone other than your parents.


What is limited guarantee?

You can use a limited guarantee to reduce the risk faced by your guarantors for your home loan. With a limited guarantee, they are only liable for a part of your home loan.

To calculate this, you need to know how much you want to borrow and the property price. You can then calculate your limited guarantee with the formula:

Size of the limited guarantee = (total loan amount / 0.8) – property price

Keep in mind that this formula is to work out how much limited guarantee you will need to keep your total LVR at 80%. You’ll also need to make sure that your guarantor at least has enough equity to cover the calculated amount.

You can use our Guarantor Loan Calculator as a guide to work this out.

You can also call our brokers who specialise in guarantor loans on 1300 889 743 or fill in our free online assessment form and they can do the calculations for you.

  • Tweddle

    What can I use as reference of a guide to find out the size of the limited guarantee?

  • Hello Tweddle,

    You can use the guarantor loan calculator as a guide to help work out the size of the limited guarantee as well as find out if you’re likely to have trouble obtaining approval with some lenders. Here’s the link to the calculator:
    https://www.homeloanexperts.com.au/mortgage-calculators/guarantor-loan-calculator/

  • Jake

    How does a debt consolidation guarantee loan work?

  • Essentially, a debt consolidation guarantee loan allows a borrower to combine their debts into one loan. This can include your credit cards, personal loans and any other debts that you may have. However, the debts shouldn’t exceed more than 5% of the property value. Check here for more info:
    https://www.homeloanexperts.com.au/guarantor-home-loans/debt-consolidation-guarantee/

  • Michael

    Are there any lenders that can do a family home loan to buy an investment property?

  • Hey Michael,
    Yes, but there are only some lenders that allow families to buy a home or investment property together. This type of family home loan will often have the parents provide equity from their property or the deposit, and the children provide their income to cover the repayments.

  • parker

    Hi, I’m considering getting an investment property later on so do you have any resource on your website that can help me estimate a bit of the cashflow?

  • You can use our property investment calculator to accurately predict the weekly cashflow position of your next investment property and find out if your property will be positively or negatively geared. You can try out our investment property cashflow calculator here:
    https://www.homeloanexperts.com.au/investment-loans/property-investment-calculator/

  • Tanya

    I was thinking of going guarantor but that may not be certain so I would like to ask if there’s any bank that can lend at least 95% with no LMI to doctors. Would prefer lower rates too, if possible.

  • Hi Tanya
    Most lenders typically lend up to 90% with no LMI home loans but BOQ Specialist loans can go up to 95% for doctors. They may even go up to 100% in some cases! However, their credit department has increasingly wanted to do loans at 90% with waived LMI rather than going higher. Unfortunately, for loans over 90% LVR, they will have higher rates so you’d need a larger deposit to avoid this.

  • bernie

    we are seniors.65 M and 58 F. Both still working. WE have a $50000 dep and would like to get out of the rental scene. Can my husband and 33 yr daughter (overseas NZ ) get a loan on a $297000 home package as co borrowers

  • Hi
    Yes this is possible although it isn’t straightforward. We’d need to assess it on a case by case basis and we’d want to be sure you have a plan for when you retire to pay out the loan or for your daughter to continue paying for it. I’ll email you and cc one of our non-resident lending experts as your daughter living in NZ is the main area of concern. We’ll also consider if you can buy on your own as some lenders are lenient with their age policy.

  • bernie

    Thankyou for your reply. We would also like to know …If our daughter returned from NZ and startded working in Aust , how long would she need to work here to qualify.She would have a $50000 gift from us plus the $20000 rural fhog. She has a solid rental history both here and NZ. The house and land package is $300000 so she would have more than 20% deposit. cheers

  • Hi Bernie,

    For some of our lenders just one day in a new job is fine. She should get a good rate as well. Generally if she is borrowing up to 90% of the property value then no genuine savings or rental history would be required.