If you’re trying to buy your first home and don’t have a big deposit saved, you may have heard of a family guarantor loan. But what does that actually mean — and is it something you should consider?
Here’s the simple breakdown.
1. What a family guarantor actually is
A family guarantor is usually a parent (or sometimes a close family member) who helps you buy a home by using some of the equity in their property as extra security for your loan.
- They don’t give you money.
- They don’t join the loan.
- They don’t make repayments.
They simply guarantee a portion of your loan so the bank sees less risk — which lets you buy with a smaller deposit.
With a guarantor, you can often:
- Buy sooner
- Reduce or avoid LMI
- Borrow with low savings
- Increase your borrowing power
It’s a common pathway for buyers who are close to qualifying, but not quite there yet.
2. How a guarantor loan works (simple version)
Here’s the easiest way to understand it:
- Your parents use part of their home’s equity as a security buffer
- This covers part of the deposit you don’t have
- The lender treats your loan as if you have a bigger deposit
- You get approved with less savings upfront
Once your property grows in value, or once your loan balance drops enough, the guarantor can be released — meaning their property is no longer tied to your loan.
This can often happen within a few years.
3. What families should consider first
A guarantor loan is helpful, but it’s important for everyone to be on the same page.
Here’s what you should discuss:
- How long the guarantee is expected to stay in place
- What happens if your circumstances change
- Your plan to remove the guarantee once equity grows
- Whether the guarantor is comfortable with their home being used as security
A good broker will explain the risks clearly and structure the loan to protect both you and your family.
4. How we help buyers with guarantor options
We work with buyers and parents all the time to set up guarantor structures safely and responsibly.
Our team helps you:
- Understand how much equity is needed
- See whether a guarantor actually improves your options
- Set up a plan to remove the guarantee sooner
Explore alternatives like:
- 5% deposit with the Home Guarantee Scheme
- First Home Grant if building new
- Our MWC $10k Deposit Boost™ to reduce how much family help is needed
For many families, a guarantor loan is just a stepping stone — a way to get into the market faster while keeping the long-term plan simple and secure.
If you want help understanding whether a guarantor is right for you, we can walk you through it step-by-step.
