Looking to buy a home but struggling with the deposit? A guarantor home loan might help you get there sooner. Our finance brokers answer FAQs and explain what you need to know before bringing a guarantor on board.
What is a guarantor home loan?
A guarantor home loan is a loan where a guarantor provides additional security for your loan by offering a portion of the equity in their own property. This can help you buy a home with a smaller deposit or even no deposit, and in some cases avoid paying Lenders Mortgage Insurance (LMI) .
If the borrower cannot meet repayments, the lender can recover the guaranteed portion from the guarantor’s secured property.
Who can be a guarantor for a home loan?
Most lenders require guarantors to be over 18, Australian citizens or permanent residents, and to own property in Australia with sufficient equity. Guarantors are typically immediate family members such as parents, although some lenders may allow other relatives.
How to remove a guarantor from a home loan?
A guarantor can be released when the loan balance has reduced, or the property value has increased, enough that the Loan-to-Value Ratio (LVR) meets the lender’s requirements without the guarantor’s security.
This can be requested by the borrower or the guarantor and will proceed only after a full reassessment of the borrower’s financial position.
Do you need a mortgage broker to arrange a guarantor home loan?
You can approach a bank directly, but a mortgage broker can make the process smoother by matching you with lenders who offer guarantor loans, structuring the application to meet policy requirements, and ensuring the guarantor’s position is clearly understood and protected.
What are the benefits of using a broker for a guarantor home loan?
A mortgage broker can:
- Recommend lenders whose guarantor loan policies suit your situation
- Structure the loan to minimise the guarantor’s exposure
- Ensure all documentation, legal requirements, and independent advice are in place
- Negotiate competitive interest rates and terms
- Manage communication between all parties to keep the process on track.
Do you need independent legal advice for a guarantor home loan?
Yes. Most lenders will require the guarantor to obtain independent legal advice before signing loan documents. This ensures they fully understand the risks, obligations, and potential financial impact of acting as a guarantor.
Ask Our Mortgage Brokers About Guarantor Home Loan Options
At BlueRock Finance , we believe impossible dreams just need the right finance broker. Whether you’re trying to secure a home loan with a small deposit, or your financial situation requires expert advice, we’re here to help make your property dreams a reality. Submit the form below to speak to a broker.
Disclaimer: This information is general in nature and does not take into account your personal circumstances. You should seek independent legal, financial, and taxation advice before making any decisions. Lender policies can differ significantly and may change over time. Always confirm current requirements with your mortgage broker. Acting as a guarantor carries financial risk, and in the event of borrower default your property may be at risk.
