Guarantor Home Loans

Most lenders require the guarantor to be an immediate family member — parent, sibling, or sometimes a grandparent. A few specialist lenders accept other relatives or close friends, but the criteria are stricter and the rates are often higher. The guarantor must have sufficient equity in an Australian residential property (usually at least 20% equity after the guarantee is in place) and meet the lender’s age and serviceability requirements. If your guarantor is over 65, some lenders cap the guarantee term or require evidence of retirement income to prove they can service their own loan if called upon.

No. The lender pursues you first — missed payment notices, default processes, hardship assessments. The guarantor is only called on if you default and the lender can’t recover the debt from your property (e.g. you’ve sold or the property value has fallen and there’s a shortfall). In a limited guarantee, the guarantor’s liability is capped at the guaranteed amount (typically 10-20% of your property value), not the full loan. It’s still serious — a default can lead to the lender forcing sale of the guarantor’s property to recover the shortfall — but it’s a last resort, not an automatic monthly backup.

Typically 4-8 weeks. You request a valuation (cost ~$200-$300), the lender reviews your repayment history and confirms the new LVR is below 80%, then issues a discharge of guarantee. The discharge is registered on the guarantor’s title, and their property is free. Some lenders process this as part of a refinance (faster, often 2-3 weeks), others require a standalone application. Andy coordinates the timing so you’re not paying for unnecessary delays or duplicate valuations.

Yes, but expect closer income scrutiny. Lenders want at least 1-2 years of ABN history and recent tax returns showing stable income. The guarantor’s position doesn’t change — they’re still guaranteeing the deposit shortfall — but your income verification takes longer. Andy works with lenders who accept self-employed borrowers on guarantor loans without inflated rates, and he structures the application so your income is presented clearly (using tax returns, BAS statements, and accountant letters) to avoid unnecessary declines.

The guarantee is discharged at settlement when you sell. Sale proceeds pay out the loan, and any surplus equity goes to you. If there’s a shortfall (property sold for less than the loan balance), the lender claims the shortfall from the guarantor up to the guarantee limit. In a rising market, this is rare — most Perth buyers who sell within 3-5 years have enough equity to cover the loan and walk away with a profit. Andy discusses worst-case scenarios before you commit, so the guarantor knows the exact exposure if you need to sell in a downturn.

Sometimes. If you can pay down the loan or top up from savings to bring the LVR below 80%, the guarantee can be released early. Alternatively, if you’re willing to pay LMI at that point (on the remaining shortfall), some lenders will discharge the guarantee and replace it with an LMI policy. This costs $3,000-$8,000 depending on your LVR, but it frees the guarantor immediately. Andy walks through the math: is it cheaper to wait 12 months for natural equity growth, or pay the LMI now and release the guarantee today?

No, but their property must be in Australia and meet the lender’s security criteria (residential, not commercial or rural). Most major lenders accept interstate guarantors, but they’ll need to travel to a WA solicitor or arrange interstate legal advice to satisfy the independent advice requirement. A few lenders restrict guarantor properties to the same state as your purchase; Andy checks each lender’s policy upfront so you’re not surprised mid-application.

They can, but they’ll need the new lender’s consent or they must arrange for the guarantee to be released first. If your LVR is still above 80%, releasing the guarantee early means either paying down your loan, accepting LMI, or finding a new guarantor. In practice, most guarantors wait until your loan reaches 80% LVR before refinancing — it’s usually only 2-3 years. If they need to sell urgently, Andy works with both lenders to structure a simultaneous discharge or transfer the guarantee to another property the guarantor owns.

Generally no. Most lenders restrict guarantor loans to owner-occupied purchases or in rare cases, your first investment property if you’re also living in it initially. The logic: a guarantor loan is a family-assistance product aimed at first home buyers, and lenders see owner-occupiers as lower risk. If you’re buying an investment property, you’ll need a standard low-deposit loan with LMI or a larger cash deposit. A handful of non-bank lenders offer guarantor loans for investment properties, but rates are higher and LVR limits are stricter (often max 90% instead of 95%).

The guarantor meets a solicitor (not the same one acting for you or the lender) who explains the guarantee deed line by line: what ‘limited guarantee’ means, the maximum liability, the conditions under which the lender can call on the guarantee, and the guarantor’s rights if you default. The solicitor confirms the guarantor understands the risks, isn’t being coerced, and has considered their own financial position. They issue a certificate of independent legal advice, which the lender requires before proceeding. This costs the guarantor $300-$600 and takes about 30-60 minutes. Andy provides the guarantor’s solicitor with a plain-language explainer of the loan structure beforehand so the meeting is efficient and the guarantor isn’t hit with jargon.