Parents or other family members can use the equity in their home to help their children or relatives buy a home. Having a family guarantee can help home buyers access the market sooner and potentially without a deposit, help the borrower save money by reducing LMI, and help to reduce the borrowers LVR.

Whilst it’s usually called a parental guarantee, a family guarantee can actually be any immediate family member, including your siblings, parents, or your children.

If you don’t have enough money put away for your deposit, your options are to either wait and keep saving, pay Lenders Mortgage Insurance, or, if your chosen family member agrees, you may be able to get a family guarantee.

If you default on your repayments, your bank will have the right to sell the property in order to recover the funds for the loan. If there is a shortfall, the bank has the right to obtain the difference from the guarantors. The worst-case scenario if you defaulted on your repayments could mean that your parents could lose their house, your lender is able to sell your parents’ house to recoup the shortfall should there be any.

On average, it takes around 3-6 years to have fully repaid the loan secured against your parent’s property, however your parents can remove their security at any time. We simply refinance the mortgage and include any LMI if applicable.

If your children or relatives are purchasing a home, they may ask you for some help in the form of a family guarantee. This means that you can use the equity in your home to help your children or relatives access the market sooner, potentially without a deposit or LMI.

As the guarantor, you will not need to pay the lender any money, you will just have to accept the family guarantee agreement and be sure that the borrower can make all their repayments.

If you own two properties, for example, the home you live in and an investment property, it’s up to you which house you would like to use.

If the borrower defaults on their payments, the lender is able to sell their property in order to recover the funds for the loan. The bank has the right to obtain the difference from you should there be a shortfall, the worst-case scenario would be that the bank sells your house to recoup any shortfall amount.

On average, it takes around 3-6 years to have fully repaid the loan secured against your property, however you can remove the security at any time. We will simply refinance the mortgage and include any LMI if applicable.