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Guarantor Home Loan

What is a Guarantor Home Loan?

A guarantor home loan allows family members or, in some cases, someone else who is close to you, to ‘guarantee’ a loan. This means they will be responsible for paying back the loan if you can’t. A guarantor usually has to offer equity (such as a percentage of their own home) as security for part or all of your mortgage.

For a guarantor home loan you would borrow an amount from a bank and repay it, but the guarantor’s equity essentially acts as additional collateral should something go wrong, which means the bank could take possession of it if your guarantor also can’t meet the repayments.

Key Issues
Why choose a Guarantor Home Loan?

One of the main benefits of having a guarantor on your home loan is that it may help you avoid paying Lenders Mortgage Insurance (LMI). It can be paid upfront as a one-off or added to your loan repayments, depending on the lender. A guarantor could also help you secure funding from a bank if you don’t have enough saved for a 20% deposit, and can help reassure the bank that mortgage repayments will be covered even if something unexpected occurs and you can’t pay.

The main risks and drawbacks associated with a guarantor home loan are for the guarantor, who is ultimately liable to cover mortgage repayments and fees if the borrower is unable to. Any potential guarantors should carefully consider the decision to go guarantor, as it could put their hard-earned savings or potentially their home at risk and delay retirement plans.

Lenders’ Views on Guarantor Home Loans
Some lenders may let you borrow up to or even above 100% of the value of the property you’re buying if you have a guarantor, but it really depends on the lender, your financial standing as a potential borrower and the circumstances of your proposed guarantor or guarantors, as well as factors like the size of your loan. As with any home loan, your lender will still consider whether you can afford your loan repayments, along with your track record of saving.

Find out how much you can borrow

Please complete this 3 minute form & provide us with your brief financial background. We will then come back to your within the next 24 business hours with an estimated range of your borrowing capacity


1. Can a guarantor help with both servicing and security? Or is it just security?

Some lenders will allow guarantors to help with servicing of the loan but generally, the majority of lenders only allow the guarantor to help with security.

2. How does providing a guarantee effect the guarantor?
  1. There is little to no effect for the guarantor when the guarantee is able to make payments on time.
  2. The guarantor agrees to the loan to help the guarantee, not themselves.
  3. There is recourse against the guarantor.
3. How does a guarantor be released from their obligations?

There are a number of ways that a guarantor can be released from their obligations, these include:

  1. Paying down the loan
  2. Having the equity of the guarantees home increase

But normally, it is a combination of both of these outcomes.

What’s involved in obtaining a loan through Intuitive Finance?

Process begins

Step 1

Initial consultation (via the phone, skype or face to face) where we establish your motivations and requirements

Step 2

Information gathering to confirm your financial status

Step 3 Review & Strategise

Clear and detailed review of your financial position with a suggested proposal for you to consider including an assessment of the best and most appropriate deals available

Step 4
Agree & Implement

Complete the necessary application paperwork including follow-up negotiations with lenders and adjustments if necessary

Step 5

Finalise approval (s), arrange formal paperwork to be signed

Step 6

Coordination of the settlement process
Process ends

The 8 Things First Home Buyers Need to Know About Finance

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