Borrow up to 105% with a guarantor or family pledge

What is a guarantor home loan?

Guarantor home loans are a great option for borrowers who do not have the deposit required to purchase a home, or may enable you to avoid paying lenders mortgage insurance (LMI). Depending on your situation, you may be able to borrow up to 105% of the property’s value.

Whether you need a guarantor for your orwn loan or you’ve been asked to be a guarantor for someone else on their loan, you need to understand what’s involved. We go through all the key points below.

A guarantor provides additional security to a lender for a loan. For example, a guarantor on a home loan may be asked to provide the equity in their own home as additional security for another borrower’s loan (usually for an immediate family member).

This additional security is typically a requirement for the lender to approve a loan application when a borrower has either poor credit history or insufficient deposit to meet the lender’s maximum loan-to-value ratio (LVR).

The guarantor is legally liable for the loan (or a specified amount) if the borrower fails to make their repayments. This includes any additional loan fees, charges and interest. Guarantors don’t have the right to any property or other assets bought with the loan funds.

It’s important to note that under the responsible lending provisions of Australian credit law, the lender must assess that the borrower has the capacity to make their repayments before they approve a loan application. The guarantor is additional security if those circumstances change in the future.

Frequently Asked Questions

We go through a number of frequently asked questions about guarantor home loans below. If you have any further queries or would like assistance in organising a guarantor loan, please get in touch for an obligation-free conversation about your needs.