Saving up for your traditional home down payment can be an incredibly daunting task, especially for those to-be homeowners who are early on in their careers or don’t have a partner to split the cost. In addition to saving for the deposit, getting approved for your first loan as a first-time homeowner can be a timely process. But what if there is an easier way?

Enter parental guarantor loans.

Parental guarantor loans have a ton of potential benefits, so what does having a parent guarantee your home loan look like in practice?

What is a parental guarantor home loan?

A parental guarantor home loan allows your family members to ‘guarantee’ your loan by typically offering up a percentage of their own home or other equity in order to ‘guarantee’ your loan. However, this also means a parental guarantor is taking responsibility to pay back your loan if, for some reason, you are unable to.

Think of it as a security deposit. As long as you continue to make repayments on time, your parent or family member’s assets will never be touched. But if you stop paying your mortgage on time, the bank can look to the guarantors to have the loan repaid.

This is not going to feel dissimilar from a regular home loan for you. You will borrow money from the bank and then repay it, including interest. But your guarantor’s equity represents an additional layer of security for all of or a portion of your loan should something go wrong. This is important because there is a risk here: if both you and your guarantor are unable to make the required payments on the loan, the bank could take possession of your parents home (or other equity offered to guarantee your loan). 

With some lenders, once you repay the portion of the loan that your parent or family member has guaranteed, they are no longer liable for any loan defaults later on. Otherwise, yu can apply to have the guarantors “released” usually once the total loan is no greater than 80% of your total property 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? Just like you, the bank will have certain requirements of the person that is going to guarantee your loan – to ensure that their loan is going to be safely recovered.

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. There are a host of financial requirements that lenders will look to see in your guarantor, but a good credit score, property to be used as collateral and a stable income are stock standard.

How much can I borrow with a guarantor?

You can borrow up to the full amount of the property price and even more if you need to cover other expenses such as stamp duty, however, each lender is different and this will depend a great deal upon your and your guarantor’s specific situation. Get in touch today to find out how much you could borrow with a parental guarantor.

Why choose LiveInvest as a first time home buyer?

• Fast Approvals: When you’re a first time home buyer in an aggressive market, time is of the essence. It’s paramount to have a mortgage broker that values this position in the process and we know that it’s important to you to get results as soon as possible. With fast-track loan options and streamlined application processes, LiveInvest is committed to getting your first time home buyer loan approved faster!
• Convenience: First time home buyers are hardworking and active individuals. Their time is important and we at LiveInvest put our clients first so that you don’t have to spend time sitting in a waiting room or bank queue in order to lodge your loan application. Flexibility is one of our core values and that means that our brokers visit you at the time and location that’s most convenient for you. 
• Range: We offer commodities to suit the requirements for all first time home buyers. We understand that everyone’s circumstances are distinct and therefore, it’s important that we fit your solution to your particular set of criteria. Let us know if there are specific specifications we need to be cognizant of to fit your situation and we’ll find an affordable resolution for you!
• Relationship: Unlike most mortgage brokers, our first time home buyer service goes beyond the settlement of your new loan. We provide ongoing support, even after you are approved for your first time home buyer loan, to ensure that you continue to have access to the best finance solutions on the market!
• Network: We are partnered with some of the most reliable local professionals and businesses, so we can help you get the best advice and most trustworthy service on the market!

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