Saving for a traditional home deposit can be daunting, especially if you’re early in your career or don’t have a partner to share costs. Getting approved for your first home loan can also take time. But there is an easier way. Parental guarantor loans let parents use their home equity to support your loan, which can reduce your deposit and speed up approval.

These loans have many potential benefits. But what does it actually look like when a parent guarantees your home loan?

What is a parental guarantor home loan?

A parental guarantor home loan lets your family members guarantee your loan by offering a portion of their own home equity. This acts as security for the bank. However, it also means your parent or family member is responsible for repaying the loan if you cannot.

Think of it like a security deposit. As long as you make your repayments on time, your guarantor’s assets remain untouched. But if you miss payments, the bank can require the guarantor to cover the loan.

For you, the loan works like a regular home loan. You borrow money from the bank and repay it with interest. Your guarantor’s equity provides extra security for all or part of the loan. This is important because there is risk: if both you and your guarantor cannot make payments, the bank could take possession of your parent’s home or other equity used as security.

With some lenders, once you repay the portion of the loan guaranteed by your parent or family member, they are no longer liable for future defaults. In other cases, guarantors can usually be released once your total loan is no greater than 80% of the property’s market value.

Who can act as my guarantor?

A parental guarantor home loan allows your family members to ‘guarantee’ your loan. So who can act as your guarantor? Like you, the bank has requirements for the person guaranteeing your loan to ensure it can be safely repaid.

Your immediate family is generally required to be your guarantor, so your parents are the most common path. In some cases, lenders will consider other family members such as siblings or grandparents to guarantee your loan. Lenders have several financial requirements for your guarantor. Typically, they look for a good credit score, property to use as collateral, and a stable income.

How much can I borrow with a guarantor?

You can borrow up to the full property price, and sometimes more to cover costs like stamp duty. Each lender has different rules, and it depends on your and your guarantor’s situation. Get in touch today to see how much you could borrow with a parental guarantor.

Why choose LiveInvest as a first time home buyer?

• Fast Approvals: As a first-time home buyer in a competitive market, time is crucial. You need a mortgage broker who understands this. With fast-track loan options and streamlined applications, LiveInvest is committed to getting your loan approved quickly.
• Convenience: First-time home buyers are busy and hardworking. We value your time. That’s why our brokers meet you at the time and place that works best, so you don’t have to sit in waiting rooms or bank queues.
• Range: We offer loan options to suit every first-time home buyer. Everyone’s circumstances are different, so we tailor solutions to your needs. Tell us your requirements, and we’ll find an affordable solution for you.
• Relationship: Our support doesn’t stop at loan settlement. We continue to help you after your loan is approved, ensuring you always have access to the best finance solutions.
• Network: We partner with trusted local professionals and businesses. This ensures you get the right advice and reliable service every step of the way.

Utilise our mortgage affordability calculator to figure out what your loan repayment might look like. If you’re interested in hear