Who is an acceptable guarantor?
Most banks will only allow:
- Parental guarantees i.e a guarantee from your parents or co-borrower’s mum and dad
- Adult children
- Spouse (this is commonly for asset protection reasons)
- De facto partners
The following immediate family members are also acceptable as an exception to standard policy:
- Step-parents and legal guardians
- Children or stepchildren
The following family members are typically unacceptable but can be acceptable depending on their relationship with you:
- Uncle and aunt
- Other families such as cousins
Who is not acceptable?
The guarantor needs to have a strong relationship with you so, generally speaking, the following people are not acceptable:
- Friends, unless a term deposit is used as security
- Work colleagues
- Former de facto partners or spouses
- Anyone else who doesn’t have an immediate relationship with you
- Anyone who has a bad credit history
If someone other than your parents is your guarantor, there are some specialist lenders that can help but you pay a premium to get approved.
Please call us on 1300 889 743 or complete our free assessment form to discover how we can help you qualify for a guarantor loan.
What is the eligibility requirement to be a guarantor?
They must be at least 18 years of age.
Guarantor’s property must be in Australia
Banks won’t accept a property located overseas as security for your home loan.
They need to be an Australian or New Zealand citizen. However, some lenders will accept guarantors that are living and working overseas.
It’s not uncommon for people later in life to move overseas and keep their home in Australia as an investment property.
Please complete our free assessment form to speak with one of our mortgage brokers.
Your guarantor needs to be of sound mind and will need to seek both legal and financial before making the decision to act as a mortgage guarantor.
The guarantor needs to either own their property outright or owe less than 80% of the property value on their mortgage.
There’s no hard and fast rule with this, however, be aware that the less equity you have to work, the harder it will be to borrow 100% of the property plus costs, avoid having to pay a deposit and avoid genuine savings.
Must currently be working
Most Australian banks will not accept a security guarantee from a retired or elderly guarantor.
Not all lenders are the same!
Your guarantor can be a self-funded retiree or even on the pension (if they’re over 65 years of age) as long as they obtain legal advice prior to signing the loan offer.
They also need to present a solid exit strategy to the lender.
For immediate family
For the bank to consider immediate family, it comes down to the nature of their relationship with you.
It’s common for people to have been raised by their grandparents or uncle and aunt, particularly in families in Asian cultures.
If your family member can provide a witnessed statutory declaration confirming their close relationship with you, this can strengthen your case with the lender.
What if my guarantor doesn’t qualify?
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 in going as a guarantor. It’s nothing personal (probably) but don’t worry!
If you don’t have a deposit, one of these could be the options for you:
- Opting for no deposit solutions
- Using a personal loan
- Asking your parents for a non-refundable gifted deposit
- Buying a property with a friend under a co-borrower or co-ownership investment loan.
In this way, you can get into the property market sooner and you can reap the rewards of property ownership.
Want to know more about guarantor loans?
Check out the guarantor loan page for more information.