1300 312 712
Have Any Questions?
L2, 11-15 Deane St
Burwood NSW 2134
Visit Us (By Appointment)
Family Guarantee Home Loans
- Available Australia wide, 7 days a week
- Negotiation power for lowest interest rates
- Experienced team with expert knowledge
- Priority status with banks for quicker outcomes
Looking for a family guarantee home loan?
Fill in the below form and our team will contact you within 2 business hours
High loan
approval rates
100% client
satisfaction
Home Loan
Policy Experts
An Alternate Way to Buy a Home
You can still achieve your homeownership goals by having an immediate family member act as your guarantor. This can help you qualify for a home loan and, with a strong application, even secure LMI waivers through a family guarantee home loan.
Contact one of our expert mortgage brokers here at Zenith to discuss your situation and see how we can assist you with a family guarantee home loan.
Family guarantee home loans offer homebuyers a great alternative way of entering the property market with minimal deposit by utilising the equity available in the home of a family member. Read on to find out more.
What Is a Family Guarantee Home Loan?
A family guarantee home loan allows a borrower to get a mortgage with the help of a family member, usually a parent, who offers their property or equity as additional security. This can help avoid paying Lenders Mortgage Insurance (LMI) or assist the borrower in getting a larger loan than they might be able to on their own.
How Family Guarantee Works
In this arrangement, the family member (the guarantor) pledges their own property as collateral to back the borrower’s loan. This reduces the lender’s risk, and in return, the borrower can often secure a larger loan or avoid LMI. However, the borrower is still responsible for repaying the loan, and the guarantee only comes into play if the borrower defaults.
Typically, a guarantor is a close family member, like a parent, who owns their own home and has sufficient equity. Most lenders will also look at the guarantor’s financial position and ability to pay in case the borrower fails to repay the loan.
Do I Need a Deposit With a Family Guarantee Loan?
In many cases, you may not need a deposit at all. The guarantee provided by the family member acts as the security, which means you might not have to put down a deposit. This can be especially helpful for first-time buyers or those struggling to save enough for a deposit.
Get a home loan with full guidance and expert assistance
- Top-Rated Mortgage Broker in Sydney
- High Approval Rate over 1000+ loans
- Direct access to 50+ banks & lenders
Schedule a consultation with one of our home loan experts
Releasing the Guarantor From the Loan
The guarantor can usually be released once the borrower has paid down enough of the loan or has built enough equity in the property. The borrower may also be able to refinance the loan without needing the guarantee.
The Risks for the Guarantor
If the borrower can’t repay the loan, the lender may use the guarantor’s property to recover the debt. This is a key risk for the guarantor, so it’s important for both parties to understand the potential consequences before going ahead with a family guarantee loan. The guarantor faces the risk of losing their property in thise case. It’s important that the guarantor fully understands the potential financial consequences before agreeing to the arrangement, and independent legal advice is recommended.
While family guarantees are typically used for owner-occupied homes, some lenders may allow them for investment properties. It’s worth discussing with one of our expert mortgage brokers to understand whether this is an option for you.
Yes, there may be additional costs, such as legal fees for the paperwork involved in setting up the guarantee or other administrative charges. It’s important to clarify all fees with the lender before proceeding.
- Avoid LMI: One of the main advantages is avoiding the cost of Lenders Mortgage Insurance (LMI), which can be quite expensive.
- No deposit required: You may not need to save a large deposit, which can make home ownership more achievable.
- Stronger application: The guarantee can improve your chances of approval, especially if you’re a first-time buyer or have a smaller deposit.
- Risk for the guarantor: The primary risk is for the guarantor, as their property is at risk if the borrower defaults.
- Potential relationship strain: Financial arrangements like this can sometimes cause tension in family relationships if things go wrong.
- Legal complexity: The documentation and agreements involved can be complex, so it’s important to seek legal and financial advice before proceeding.
The application process is similar to a regular home loan, but both the borrower and the guarantor will need to provide their financial details. The lender will assess both parties’ ability to repay the loan, and once approved, the loan can proceed with the guarantee in place.
Once the borrower has reduced the loan balance significantly or built up enough equity, they may be able to remove the guarantor from the loan. This usually involves refinancing or reassessing the loan, but it’s possible to release the guarantor if certain conditions are met.
Some alternatives include:
- Lenders Mortgage Insurance (LMI): This insurance is often required if you don’t have a 20% deposit.
- Co-ownership: If someone else (like a partner or friend) is willing to co-own the property, this can help strengthen the loan application.
- Government schemes: Depending on your circumstances, you may be eligible for first home buyer grants or other assistance programs.
Our Lenders
Where
experience
counts
Having encountered thousands of different scenarios, our team is well equipped to find you suitable solutions. Having the right mortgage broker by your side is essential to ensure you are getting the absolute best deal for your unique situation.
client satisfaction
0
%
loans approved
0
+
different lenders
0
+
Join thousands of satisfied customers
Have an obligation-free chat
with one of our experts
Your success
is
our success
We understand everyone’s circumstances are different and we take the time to understand you and your goals. We value forming lifelong relationships with all our clients and we are fully committed to adding value every step of the way.
We know that mortgages can sometimes be complex and hard to understand. We focus on simplifying the process for you and we treat your loan as if it were our very own. Let us do what we do best so there’s one less thing for you to worry about.
Frequently Asked Questions
Using a mortgage broker like Zenith can help simplify the whole home loan process for you. We offer expert advice on loan products tailored to your unique situation. We save you time by doing the legwork, comparing options, handling paperwork, while also negotiating better terms and identifying potential hidden fees. Since we are not tied to any one lender, we can select the best loan suited to your needs, ensuring you get the most appropriate deal. Additionally, we proactively review your interest rate multiple times per year, ensuring you are on the most competitive rate possible.
There are no fees for our services. We get renumerated by the lender of your choice after your loan settles.
Different lenders have different lending criteria and requirements that you must meet before they lend you money. We take time to analyse your credit file, income situation, strengths and weaknesses of your financial situation, and much more, to find you the most suitable lender and loan package.
As a first step, we will need to understand your goals and objectives, and then collect and review all supporting documents. Once we have enough details to make a recommendation, it will then be up to the chosen lender’s turnaround time. This could be weeks to months, which is why we always recommend getting the process started as soon as possible, especially for property purchases.
Sometimes you may not qualify to get finance from a particular bank. Once we have assessed your situation, we will be able to find you the lowest rate possible from eligible lenders. Interest rates are only part of the equation, we’ll help you take into account all other fees and features so you can make an informed decision.
Most lenders require that you have minimum of 5% deposit of the property’s purchase price before taking out a home loan. However, in certain situations, this deposit can be lower. The maximum amount is up to you. Remember that you may have to pay Lender Mortgage Insurance (LMI) if your deposit is less than 20% of the property’s price, unless you qualify for an LMI waiver. Contact us to explore your options.
Support for Family Guarantee Home Loans