Help Your Kids To Purchase

Entering the property market is no easy feat for a first homebuyer, but parents who aren’t prepared to hand over cash for a deposit may help by being a guarantor on a loan. Before taking the plunge however, it’s crucial to be aware of the implications involved. Here are three questions to ask yourself to see if a family guarantee is right for you:

Am I financially fit to be a guarantor?

The very first thing you should be certain of is whether or not you are in a financially capable position to pay off the guaranteed amount of the loan if the borrower finds that they can no longer do so.

Do the benefits outweigh the risks?

It’s no secret that it can take a long time to save for a deposit and by becoming a guarantor, you offer the borrower the chance to enter the property market sooner.


If you were to offer a Limited Guarantee you will help the borrowers avoid paying the costly lender’s mortgage insurance (LMI). To give you an idea, they could pay over $20,000 in LMI just to borrow enough to buy a place for $600,000 with a deposit of $48,000. With a Guarantor loan there is no requirement for the borrower to have saved a deposit. Prudent lenders would get comfort in knowing that the borrowers have been good at paying rent or have paid off other debts responsibly. If you are unsure whether you would meet a Guarantor policy simply contact us. We will review the current policies across a range of lenders.



Any time you borrow money or a bank places a mortgage over your property, there are definitely things that need to be taken into account, for instance, Your ability to borrow will also be reduced after becoming a guarantor.

The good news is most Family Guarantor loans nowadays are “limited” guarantees. This means you’re responsibility is limited to the amount of the guarantee, not the entire loan amount of the borrower. The guarantee amount is usually around 20% of the value of the borrower’s property. A Guarantee can be taken against your own home, an investment property or even cash held in a Term Deposit.