A Guide to Guarantor Home Loan Requirements

The main issue for many first-time homeowners and investors in the current property market is the ability to save a deposit.

While house prices in Sydney and Melbourne have increased over recent years, interest rates are historic lows which means the ability to afford the mortgage once you’re in the market has improved.

But pulling together a big enough deposit remains a struggle for many would-be property buyers, especially when they have to pay for their living costs, including rent, at the same time.

There are alternatives out there, including guarantor home loans that can help get more prospective buyers into their first property.

Guarantor Loan Requirements

What is the structure of guarantor home loan?

Guarantor loans can be a great way for young people to achieve a deposit, but their ins and outs must be understood from the outset.

  1. A guarantor loan works by someone else (more on that a bit later) providing equity or security in their property to fund part, or the whole, deposit.
  2. A guarantor loan requirement is sufficient equity in the property offered as security.
  3. A guarantor doesn’t need to be involved in the loan for its entirely. Instead, it’s advisable that the property owner actually works towards getting the guarantor “released” from the loan, which can be achieved by paying down the mortgage or improving the property via renovations and therefore increasing its value.
  4. A guarantor is a person or persons who assumes responsibility for paying off the loan if you’re no longer able to meet your financial commitment. Essentially, the guarantor takes financial responsibility for servicing the home loan in the event that you default on your repayments. Even if the guarantee is only for 20 per cent of the entire loan, the guarantor will be wholly and severally responsible for the loan, but doesn’t have ownership rights to the property.

An example of how a guarantor loan can work is:

John and Jill want to buy a $450,000 home but have struggled to save a big enough deposit. In fact, they have only managed to save enough to pay the stamp duty and associated costs. As newly-weds, they approach John’s parents who have paid off their own home, who then agree to use $90,000 of their own equity to finance the couple’s 20 per cent deposit.

Who can be a guarantor?

Checklist Flat IllustrationThe main consideration with guarantor home loans is that they must be provided by someone who has a strong relationship with the buyer or buyers, which generally means immediate family members such as:

  • Parents
  • Siblings
  • Grandparents
  • Spouses
  • De facto partners.

There are a number of considerations or guarantor home loan requirements that the lender will take into account. These include:

  • Their age
  • Whether their property is in Australia
  • If they have sufficient equity
  • Whether they are currently employed

A guarantor also needs to be of sound mind and will need to seek both legal and financial advice before making the decision to act as a mortgage guarantor.

How much can you borrow?

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While there are some lenders that still offer home loans with a loan to value ratio (LVR) of 95 per cent, they are not nearly as common as they were before the GFC.

The vast majority of borrowers, and especially investors, are only able to access up to 80 per cent of the purchase price via a home or investment loan.

As mentioned above, that is where it becomes tricky for prospective property buyers, because it is very difficult to save a 20 per cent deposit, plus costs.

By using a guarantor home loan, however, lenders are generally more flexible with their lending criteria, which means that prospective property buyers can potentially access loans with LVRs in the 90 per cent range.

Intuitive Finance – the smart choice

First-time property buyers have used financial help from their families to get into the property market for decades.

Today, as well as cash gifts, family members can offer up part of their own homes as security to help their loved ones achieve their property dreams.
The world of banking and finance can be a pretty daunting one for both novice and sophisticated investors and since our establishment in 2002 we’ve focused on providing outstanding service and business standards.

This approach was vindicated when we were named Victoria’s favourite mortgage broker at the 2015 Investors Choice Awards.

So, if you’re considering asking someone in your family if they’re prepared to be a guarantor for your home loan, why now contact Intuitive Finance today to ensure you have the right information and expert support on your side?

Discuss your specific needs & formulate the right strategy for you. Get in touch to organise your complimentary 60min session today!


The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs.

Andrew Mirams

Andrew Mirams

Andrew Mirams is the Managing Director of Intuitive Finance and is a highly qualified mortgage advisor who holds dual diplomas in Financial Planning (Financial Services) and Banking and Finance (Mortgage Broking). Andrew’s expertise covers all aspects of lending for a diverse range of applications – from first home buyer loans or property upgrader loans, property investor loans, expatriates and loans for self-employed. With almost 30 years of experience, Andrew has been acknowledged by the mortgage industry as one of its best performers with multiple awards including regularly featuring in both the top 100 mortgage brokers list and Top 50 Elite business writers. Andrew was voted Victoria's favourite Mortgage Broker at the 2015 Investors Choice Awards, and won again for the same category at the 2017 Better Business Awards. The team at Intuitive Finance has also figured prominently by winning the 2016 "Best Independent Office (<5 brokers)" and "Best customer Service" Awards, and more recently at the 2017 MFAA National Awards, they also took out the "Best Customer Service" Award, a recognition which speaks for itself! Visit Intuitive Finance for more information.
Andrew Mirams

10 Comments. Leave new

Hi there,

Would like to ask if a credit check is still required even my love ones is the guarantor of my loan. reason behind this is my credit back ground is not too healthy when i was going though a separation with my defacto 8 years ago.

Avatar for Andrew Mirams
Andrew Mirams
May 3, 2018 7:28 pm

Hi Joe,
Thanks for your question, it’s a really good one.
Just to clarify, are you asking if you are the guarantor, do you need a credit check? If so, the answer is that it depends on the lender who you approach and what is required as some do and others don’t.
If your question is as the borrower, then in every instance a credit check is required.

I hope this helps.


My brother and I are both looking to buy houses within the next year. My parents have offered to go guarantor for us both. Can someone be a guarantor for 2 separate properties at the same time?

Avatar for Andrew Mirams
Andrew Mirams
August 8, 2018 4:59 pm

Hi Lucy,

That’s a great question. There are a few things to consider but the short answer (and good news) is Yes, they absolutely can be guarantor for more than 1 person at the same time.

If you wanted more information, we’d be thrilled to be able to assist you.


How much of the property do your parents need to own ? My mum and her partner re financed his property that he had previously owned with his ex wife, they re brought the home nearly 12 months ago. They own about 120000 of the home would they be considered to be a guarantor for me and my husband to buy a house ?


Hi Bec,
That’s a great question, thanks. What they need to have is enough equity in the property to be able to support the shortfall you have in your purchase. So it’s hard to give exact numbers here as we don’t what the figure is that you are looking to buy for but in principle, Yes, that could be sufficient to assist you and your husband buy your home.


If my parents have property overseas (UK and NZ) could the still act as guarantor?


Hi Nick,
That is a great question.
The answer is Yes, they can act as a guarantor still, however they cannot use the overseas property as security to assist. And property security would have to be here in Australia.


Hi, I currently have a rental property & looking at getting another rental with the assistance of my parents going guarantor for the 2nd property. Do I, as the purchaser still need to meet criteria to the bank in regards to my lending / earning capacity as the banks have previously advised my earning capacity is not sufficient enough for 2 rental properties


Hi Adelle,
Thanks for your question, it is a very good one.
Yes, as the purchaser/owner, it is your responsibility to meet the lending criteria to see if you can meet the requirements for another loan.
We’d be more than happy to undertake a review of your current position and advise our thoughts on your capacity if that would be of interest to you?
Feel free to email us at info@intuitivefinance.com.au or call the office on 1300342505 and one of our experts will be happy to chat to you.


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