Family Guarantee Home Loans – What to Know

Family guarantee home loans, a great solution for first home buyers to enter the property market without a deposit!

The prices in Australia are spiking up like never before in recent years, which is why purchasing homes, paying for rent, or saving up a deposit has become more daunting than ever. If you look into the numbers, you’ll find it challenging to acquire a sizable 20% deposit for first-time buyers as the median house price in capital cities is more than ever. If you’re struggling to meet the costs and are looking for alternative options to enter the current market, acquiring family guarantee home loans offers the best solutions.

What Are Family Guarantee Home Loans?

You can assign anyone, preferably close relatives, to act as a guarantor for those who need additional security in your home loan. It caters to first-time home buyers who can meet other required payments but have little to no deposit as the guarantor will provide a portion of the equity in their property to secure your loan.

To that end, family guarantee home loans works by providing the following:

  • The guarantor’s property will serve to assist you in securing your 20% deposit for a property. The lender will use the guarantor’s property as security to cover the deposit however nothing actually comes out of their pocket nor does their mortgage balance/limit get affected.
  • In case the borrower can no longer continue the payment, signing a guarantee means that your guarantor will have to pay back the portion of their loan they are guaranteeing, with some lenders the loan entirely.
  • The lender can remove the guarantor once you, the borrower, pay off a portion of the loan or when the value of the property increased to meet the bank’s lending policies. Additionally, the lender can also relieve the guarantor’s responsibility if the home buyer’s debt level is below 80% loan to value ratio.

Who can Act as Your Guarantor?

As mentioned above, lenders generally prefer immediate family members to act as the borrower’s guarantor for family guarantee home loans. This includes parents, spouses, siblings, and even parents-in-law, step parents, grandparents, aunts, and uncles. However this differs from lender to lender and should the guarantor not be your immediate parents or siblings, stricter policy applies.

What are the Requirements You Need for Family Guarantee Home Loans

Lenders are strict regarding family guarantee home loans, so keep in mind that there are specific requirements necessary before your application is subject under approval. This is to ensure that the guarantors understand the weight of their obligations, as well as to protect them from suffering from costly consequences in the unfortunate event that you fail to meet the payments.

With that in mind, borrowers must provide the following:

  • Outstanding credit history
  • Stable job
  • Steady income
  • The ability to pay the entire loan with their income

Guarantors, on the other, must provide the following evidence:

  • Good credit history
  • Strong asset and reliable equity position

If you want the loan to run smoothly, you have to take the time to prepare all the necessary documents to ensure that you and your guarantor will meet all the strict lending criteria.

Having a trust-worthy family member act as a guarantor for your home loan is an excellent way of purchasing a property faster. It also steers away borrowers from paying Lenders Mortgage Insurance, while your relatives themselves don’t have to pitch in their funds in the process.

However, utilising family guarantee home loans is a decision that both parties cannot take lightly. If anything were to go wrong, the guarantor could suffer a significant financial burden as a part of their property is on the line. That’s why it’s essential to take the time to consider all possibilities before concluding.

If you’re looking for family guarantee home loans in Australia, engage the services of a mortgage broker at Highline Lending to aid you through this process from start to finish. We’ll take a look at your financial position and put a plan in place to ensure your home loan gets approved in the most beneficial way for yourself.  Contact us on 02 8530 1107 or submit your scenario online. 

So, why use Highline Lending for your home loan?

We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position

We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks

With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution

Access our free e-guides

Whether you’re a first home buyer looking at entering the market or an existing home owner looking at ways to save money on your home loan, we have you covered. We’ve put hundreds of hours of research into these guides to ensure you end up ahead, and it’s completely on the house.

View All Our Articles
How to not get a loan refused
Property & Finance Articles
Justin Wyse

4 Top Reasons Why Your Home Loan May Be Declined

The odds are that you’ve stumbled across the term lender’s mortgage insurance and you’re wondering what it stands for. Well, you’ve come to the right place. This article will clarify this term, so that you can understand what it is, the concept behind it and the approximate costs. Let’s get started!

Read More »
Property & Finance Articles
Justin Wyse

What is a Bank Comparison Rate? Does It Affect My Home Loan ?

In short, comparison rates determine what your loan will really cost you. They save you from the hard work required to compare and determine the costs of different loans. However, keep in mind that they shouldn’t be the deciding factor when you search for a loan.
Also, remember that all lenders are required by law to display a comparison rate when they advertise a loan to you. If you pay attention and spot this rate, you may end up getting a better deal on your home loan.

Read More »

4 CRUCIAL Tips to Consider When Looking for a Mortgage Broker

The odds are that you’ve stumbled across the term lender’s mortgage insurance and you’re wondering what it stands for. Well, you’ve come to the right place. This article will clarify this term, so that you can understand what it is, the concept behind it and the approximate costs. Let’s get started!

Read More »

Download Your Free Guide from Highline Lending

The Ultimate First Home Buyers Guide

What you need to know before you purchase your first property and how to fast track it. We have designed this guide to get you up to date with everything you need to know about being a first home buyer. Whether you have a short term goal of purchasing your first property or are thinking about it sometime later down the track, this guide will cover important essential aspects of this exciting journey.

The Ultimate Home Owners & Investors Guide

What the banks won’t tell you and how to save serious money on your home loan. By Investing 10 minutes of your time to read through our guide, not only will you learn the tips and tricks the banks won’t always tell you to assist you with paying off your home loan sooner, but also gain an insight into some techniques that will allow you to minimise the interest you pay to the bank.

The Highline Lending Budget Planner

The best way to take control of your finances is to use a budget planner. This is a simple tool that helps you understand the money going in and out of your household. With our Highline Lending Budget Planner, we’ve got you covered. This handy tool allows you to log and track your goals, track your savings, track your debt and expenses and keep a monthly record for an end of year evaluation.