A guarantor arrangement uses the equity in a family member's property as additional security for your loan. Done properly it can remove lenders mortgage insurance and bring a purchase forward by years — and it puts their property at risk, which is why it needs care.
Helps you work out: how a family guarantee can shrink the deposit you need — and whether your guarantor has the equity to support it.
Guarantee Needed
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Loan Required
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LVR Without Guarantor
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Guarantor equity available
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General advice warning
The results provided by this calculator are estimates only and should not be taken as personal financial advice. The calculations are based on the assumptions you have entered and do not take into account your personal objectives, financial situation or needs. Before making any financial decisions, we recommend you consult with a qualified financial adviser. Financial Elements PTY LTD (Corporate Credit Representative Number 499510) is an Authorised Corporate Credit Representative of BLSSA Pty Ltd (Australian Credit Licence 391237).
A guarantee does not give you money. It gives the lender more security, which lowers the effective loan-to-value ratio — and that is what unlocks the better outcome.
The guarantee is capped at a set amount — enough to bring the combined LVR under 80% — rather than covering the whole loan. Your guarantor is liable for that capped portion only, which is the arrangement most lenders, and most families, prefer.
Once your own property's value and your repayments bring the LVR below 80%, the guarantee can usually be released after a revaluation. Agree roughly when you expect that to happen before anything is signed.
Your guarantor should take their own legal advice and understand what happens if you cannot pay. Their own borrowing capacity, their retirement plans and their lender's consent all matter. A guarantee is a genuine obligation, not a formality.
Security, not cash. They offer a mortgage over part of the equity in their property, which the lender counts alongside the property you are buying. Combined, that can bring the LVR below 80% and remove the need for lenders mortgage insurance.
Enough to cover the shortfall between your deposit and a 20% position, plus a margin. Any loan already secured against their property reduces what is available, so the calculator works from their property value and their outstanding balance.
Under a limited guarantee, no — only the guaranteed amount. An unlimited guarantee exposes them to the full loan and is far less common. Confirm which is being offered before you proceed.
Most lenders restrict it to immediate family, and many require the guarantor to live in the security property. Policies differ considerably, which is where knowing individual lenders' rules earns its keep.
The lender pursues you first, but if the shortfall persists the guaranteed portion can be called on and their property is at risk. That is the reason for independent legal advice, and for keeping the guarantee limited and time-bound.
We will model what the guarantee would need to cover, which lenders accept the structure, and how soon it could be released — so the conversation at home is a clear one.