Guarantor Loans
A guarantor loan is a solution designed to help homebuyers, particularly first-time buyers, overcome the hurdle of saving a substantial deposit.
It can accelerate your entry into the property market and potentially save you thousands of dollars.
Unlock Your Homeownership Dreams
Instead of waiting years to save for a deposit—while property prices continue to climb—a guarantor loan allows you to rely on the equity in a family member’s property. This family member, often a parent, acts as a guarantor for your loan, using their property’s equity to secure part or all of your deposit and associated purchase costs.
How to Get a Guarantor Loan
- 1
Identify a Willing Guarantor: A family member, such as a parent, needs to agree to use their property’s equity as security for your loan.
- 2
Assess Your Borrowing Capacity: Work with a mortgage broker (like Funds Assist Financial Services) to determine how much you can borrow, ensuring the loan fits your budget and objectives.
- 3
Review Guarantor Obligations: The guarantor will need to provide proof of property ownership and equity. They may only guarantee a portion of your loan, such as the deposit, minimizing their risk.
- 4
Choose the Right Lender: Not all lenders offer guarantor loans. A specialist broker can help you find one that fits your needs and your guarantor’s preferences.
- 5
Apply for Pre-Approval: With the guarantor arrangement in place, you can move forward with pre-approval, enabling you to start your property search.
Why Consider a Guarantor Loan?
Guarantor loans can open doors to homeownership that might otherwise seem out of reach. To explore whether this is the right option for you and understand the risks and benefits for both you and your guarantor, reach out to one of our experienced Funds Assist Financial Services Mortgage Brokers. We’re here to guide you every step of the way.
- 1
Enter the Market Sooner: Avoid spending years saving while property prices rise.
- 2
Save on Lender’s Mortgage Insurance (LMI): A guarantor loan can help you avoid costly LMI, which applies when your deposit is less than 20% of the property value.
- 3
Access Higher Borrowing Power: With the guarantor’s backing, you may qualify for a higher loan amount.
- 4
Boost Your Financial Position: By starting sooner, you can benefit from property value growth earlier.
Can My Parents Still Help If They Don’t Have Equity in Their Home?
Yes, they can! Even if your parents don’t have equity in their property, they might still be able to assist you in achieving homeownership. Many first-home buyers turn to the “Bank of Mum and Dad” for financial support.
If your parents can provide financial help—whether through a gift, savings, or other means—it may still count as a form of assistance that lenders accept. This could be classified as non-genuine savings, which refers to money that hasn’t been accumulated over time but is still valid for a home loan deposit.
Some examples of non-genuine savings include:
Non-genuine savings can significantly help bridge the gap needed for a deposit and make homeownership more accessible.
Getting Started
It’s important to assess your unique situation to ensure this option works for you. Schedule an appointment with a Funds Assist Financial Services broker, along with your parents, to explore all the available options. We’ll guide you through the process and help you evaluate the best approach to secure your first home.
