A smaller deposit, backed by family.

A guarantor loan lets a family member — usually a parent — use the equity in their own property as extra security for your loan, instead of you needing a full cash deposit. It can let you borrow with a smaller deposit (or none at all) and avoid lenders mortgage insurance. The guarantor isn't lending you money; their property backs part of your loan with the bank.

Not the whole loan. Guarantees are typically limited to a fixed amount — enough to cover the gap between your deposit and roughly 80% of the property's value, plus costs. That limit is set out in the loan and guarantee documents before anyone signs, so the guarantor's exposure is capped, not open-ended.

No, not unless you default and the lender calls on the guarantee. You remain solely responsible for your own repayments. The guarantor's risk is that if you fall behind and the lender can't recover the shortfall from you, it can pursue the guaranteed portion against the guarantor's property.

Once your loan balance falls to around 80% of the property's value or below — through repayments, value growth, or both — you can apply to your lender for a formal release. The lender orders a new valuation, confirms the LVR and your ability to service the loan alone, then releases the guarantee. This commonly happens within a few years, not the full loan term.

No — they're different things that can sometimes work together. A guarantor loan is a private arrangement between you, a family member and your lender. The Family Home Guarantee is a government scheme (via Housing Australia) for eligible single parents or legal guardians with a dependent child, offering a government guarantee on part of the loan with a deposit from 2% and no LMI — subject to place and eligibility limits each financial year. We check which options, or combination, actually suit your situation.

Yes — every lender requires it, and it isn't optional. Before a guarantor loan can proceed, the guarantor must get independent legal advice from a solicitor who isn't acting for you, and sign a certificate confirming they understand exactly what they're guaranteeing and the risk to their own property. It's a genuine risk to take seriously, which is exactly why that step exists.

Usually a parent, though some lenders accept other close family. Their property doesn't need to be mortgage-free — the lender assesses how much usable equity is left after their existing mortgage — but they do need enough equity to cover the guaranteed portion, and lenders assess the guarantor's own financial position too.

Most major banks and many non-bank lenders offer some form of family guarantee, but policies on maximum loan size, acceptable guarantors and release conditions vary a lot between them. We compare across our panel to find the structure that suits your family's situation, not just the first lender that says yes.