How a Guarantor Home Loan Can Help You Buy Sooner?
Buy Sooner, With a Little Help from Family
Saving a home deposit can be one of the biggest hurdles to buying your first home. Between rising property prices and living costs, getting to that 20% mark can feel out of reach.
That’s where a guarantor home loan can make all the difference.
A guarantor loan allows a family member — usually a parent — to use a portion of their home’s equity to help you secure your loan. This can mean:
- Buying sooner with a smaller (or no) deposit
- Avoiding costly Lenders Mortgage Insurance (LMI)
- Getting access to more competitive rates
How It Works
Let’s say you’re buying a $600,000 home.
Normally, you’d need $120,000 (20%) as a deposit to avoid LMI.
With a guarantor loan, your parents could offer $120,000 worth of equity from their own home as security for your loan. You still own your property 100%, but their property covers part of the risk for the lender.
As you build equity in your new home and make repayments, your guarantor’s responsibility reduces — and can be released completely once your loan-to-value ratio (LVR) drops below 80%.
Who Can Be a Guarantor?
Most lenders require your guarantor to be an immediate family member, such as:
- A parent or step-parent
- Sibling (in some cases)
- Grandparent
They must also:
- Have sufficient equity in their property
- Have a stable financial position
- Understand the legal responsibility involved
Pros and Cons
✅ Advantages:
- Buy your first home sooner
- Avoid LMI (potentially saving tens of thousands)
- Smaller or no deposit needed
⚠️ Considerations:
- The guarantor’s property is at risk if repayments aren’t made
- Both parties should seek independent legal and financial advice
- The guarantor may have reduced borrowing capacity for their own needs
When Does the Guarantee End?
Once your property gains enough equity or you’ve paid down enough of the loan to reach 80% LVR, you can apply to remove the guarantee.
This is often just a few years into the loan, depending on property growth and repayments.
At Loan Market Euroa, we help track your progress and guide you through the process of removing your guarantor when the time is right.
Why Choose Loan Market Euroa
At Loan Market Euroa, we specialise in helping families structure guarantor loans safely and strategically.
We’ll:
- Compare lenders that offer flexible guarantor policies
- Calculate your borrowing power accurately
- Manage all paperwork and communication with the lender
- Support both you and your guarantor with clear advice
Buying your first home with a guarantor can be a smart way to take that next step — with confidence and family support.
Ready to Explore Your Options?
If you’re considering using a guarantor to buy your home, our team can guide you through every step.
Call Matthew Teasdale on 0448 517 831
Email: matthew.teasdale@loanmarket.com.au
Website: www.loanmarketeuroa.com.au