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
Partnering with a mortgage broker like Zenith can significantly streamline your home loan journey. We provide expert advice on loan products carefully tailored to your unique financial situation. By handling the legwork, comparing multiple options, managing paperwork, and negotiating better terms, we save you valuable time and help identify potential hidden fees. As we are not tied to any single lender, we can select the best loan for your needs, ensuring you secure the most suitable deal. Additionally, we proactively review your interest rate multiple times per year to ensure you remain on the most competitive rate available, maximising your savings and giving you long-term peace of mind.
Our services are provided at no cost to you. We receive compensation directly from the lender you choose once your loan is settled, ensuring that you can explore your options without incurring any upfront fees.
Each lender has unique criteria and requirements that must be met before they approve a loan. Our team takes the time to thoroughly analyse your credit history, income situation, and the specific strengths and weaknesses of your financial circumstances. This allows us to match you with the most suitable lender and loan package tailored to your needs. Our experienced professionals will provide you with comprehensive information, ensuring you have everything necessary to make an informed decision.
To begin, we’ll work closely with you to understand your goals and objectives. We’ll then gather and review all necessary supporting documents to ensure we have a comprehensive understanding of your situation. Once we have sufficient information to make a personalised recommendation, the next step will depend on the chosen lender’s processing timeline. This can vary from several weeks to a few months, which is why we strongly advise initiating the process as early as possible, especially when it comes to property purchases, where timing can be crucial.
You may not always qualify for financing from a specific bank. After assessing your unique situation, we’ll work to find you the lowest possible interest rate from eligible lenders. While interest rates are important, they’re just one piece of the puzzle. We’ll also help you consider all other fees and features associated with each loan option, ensuring you have a complete understanding of your choices and can make an informed decision that best suits your needs.
Typically, lenders require a minimum deposit of 5% of the property’s purchase price to secure a home loan. However, in some cases, it may be possible to proceed with a lower deposit. Keep in mind that if your deposit is less than 20% of the property’s price, you may need to pay Lenders Mortgage Insurance (LMI), unless you qualify for an LMI waiver. To explore your options and determine the best approach for your situation.
Support for Family Guarantee Home Loans