Who Can Be A Guarantor On A Home Loan?

A guarantor on a home loan is usually an immediate family member, such as a parent, but some lenders may also accept other relatives in specific circumstances. Approval depends on the relationship, available equity, credit history, and lender policy.

Who Can Be A Guarantor?

Most banks have a clear preference for close family members with an obvious financial and emotional connection to the borrower.

Family members commonly accepted by most lenders are:

• Parents (or your co-borrower’s parents)
• Adult children
• A spouse (often used for asset-protection)
• A de facto partner

These guarantors are considered low risk under standard lending policy.

Which Non-immediate Family Members Can Be Guarantors?

Some lenders allow guarantors outside immediate family, but only as policy exceptions and with additional checks.

Family members sometimes accepted as guarantors are:

• Siblings
• Grandparents
• Step-parents or legal guardians
• Children or stepchildren
• Step-siblings

Approval usually requires stronger documentation and conservative loan structures.

Can An Uncle Or Aunt Be A Guarantor On A Home Loan?

Yes, an uncle or aunt can sometimes be a guarantor, but only in limited situations. Lenders typically approve this when the uncle or aunt has played a parental role and the relationship can be clearly demonstrated.

Such approvals usually result when:

• You were raised by them
• You lived with them for an extended period
• They have an excellent credit history
• They can provide a witnessed statutory declaration confirming the relationship

Who Cannot Be A Guarantor On A Home Loan?

Lenders usually reject guarantors who lack a close personal relationship with the borrower.

People typically not accepted as guarantors are:

• Friends, unless a term deposit is used as security
• Work colleagues
• Associates
• Former de facto partners or spouses
• Anyone else who doesn’t have an immediate relationship with you

If you want someone other than your parents to be your guarantor on your home loan, specialist lenders can help, for a premium.

What Options Exist If I Cannot Use A Guarantor?

In some cases, your mum and dad won’t be able to act as guarantors on your mortgage because they don’t have enough equity in their property or they’re close to retirement.

Other times, parents may simply not be comfortable acting as a guarantor.

If your preferred guarantor doesn’t qualify, one of these options could be for you:

• A no deposit loan
• A personal loan
• Asking your parents for a non-refundable gifted deposit(so you can avoid LMI)
• Co-signing on a home loan with your parents (this wouldn’t require them to put up their house as a security)
• Buying a property with a friend using a co-borrower or co-ownership investment loan

In these ways, you can still get into the property market sooner and you can start reaping the rewards of property ownership.

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Get Guidance From A Professional

Taking out a home loan with a guarantor is a crucial decision and comes with much responsibility. Whether you are checking to see if you can be a guarantor or want to know if someone is eligible to be a guarantor for you, we recommend that you seek advice on guarantor loan requirements from both legal and financial professionals before deciding to proceed.

Our mortgage brokers specialise in handling guarantor loans. You can call us on 1300 889 743 or complete our free online assessment form to find out how we can help you.