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Sydney first home buyer family with parental guarantor reviewing home loan structure
Guarantor & First Home

Guarantor Home Loans — Buy With No Deposit Using Family Equity

Mortgagefy Broker Team · Published · Last reviewed

A family member uses equity in their property to guarantee part of your loan — usually 20% — letting you borrow without a cash deposit and without paying LMI. The guarantee is limited to a specific dollar amount and is released once you've built sufficient equity in your own property.

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Who this guide is for

The real challenge

Saving a 20% deposit on a $1M Sydney property means $200K — usually 5-7 years of disciplined saving. Without it, buyers either pay $15K-$30K in LMI or wait, and Sydney property typically grows faster than savings can keep up.

Parents often have significant equity in their own property but don't realise they can leverage it without giving cash. The guarantor structure is well-understood but many families and banks don't proactively suggest it.

How Mortgagefy helps

Mortgagefy works with most major and second-tier lenders that accept guarantor structures. We map the limited guarantee amount, what it secures, and the conditions for releasing the guarantor — so the parents understand exactly what risk they're taking on.

We also model the path to release: typically 18-36 months of repayments and Sydney property growth bring your LVR below 80%, at which point the guarantee is released and your parents' property is no longer linked to your loan.

How it works — 4 simple steps

1

Family discussion

We explain the guarantor structure to all parties — the buyer, the parents, the limited guarantee, the release path.

2

Equity confirmation

We confirm the available equity in the parents' property and what guarantee amount is workable.

3

Lender match

Most major and second-tier lenders accept guarantor structures — we shortlist the 2-3 best for your situation.

4

Settlement + release plan

We coordinate settlement and plan the 18-36 month guarantee release as your equity grows.

Frequently asked questions

How does a guarantor home loan work?

A family member's property equity guarantees the deposit shortfall (typically 20%) so you can borrow without cash deposit and without LMI. The guarantee is limited to a specific amount and released once your LVR drops below 80%.

Is my guarantor at risk?

Only if you default on the loan and the property sells for less than the loan balance. The guarantor's property is not transferred — it's only used as additional security. Most guarantor loans are paid normally and the guarantee is released.

Who can be a guarantor?

Usually parents, sometimes grandparents or siblings. Most lenders want immediate family. The guarantor must have significant equity (usually 50%+) in their own property and demonstrate they can support the guarantee if needed.

How long is the guarantor on the loan?

Typically 18-36 months. Once your LVR is below 80% (through repayments and property growth) we apply for the guarantee release. The guarantor's property is then unlinked from your loan.

Can I still use the First Home Guarantee with a guarantor loan?

Sometimes yes — the schemes can stack but lender rules vary. We'll check what combination is possible for your specific situation.

Get a free guarantor home loan consultation

We explain the structure to you and your parents — together — and model the release timeline. Free, no obligation.

Start Your Free Assessment Call 0432 634 648

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