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.

Guarantor Home Refinancing

Who this guide is for

First home buyers without a 20% deposit
Buyers wanting to avoid LMI which can cost $15K-$30K
Parents with equity in their property willing to guarantee a portion
Buyers entering the market sooner with family support

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

Family discussion

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

Equity confirmation

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

Lender match

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

Settlement + release plan

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

Frequently asked questions

We use offer letters and vesting schedules to value RSUs conservatively. We present current vesting value + projected future vesting as a 3-5 year income average. This gives lenders confidence in your income stability while accounting for market volatility.

Both. We work with W2 employees, 1099 contractors, and consultants. For contractors, we use 2 years of tax returns plus business financials. We have lenders who specialise in contractor income—they understand the variability.

Unvested options have zero value for refinancing. We count only vested equity. If you have a 4-year vest, we use 25% of the grant value (what's vested) plus a conservative projection of future vesting.

If you've been in your new role 6+ months, most lenders will refinance. We'll use your offer letter plus 6 months of pay stubs. If less than 6 months, it's harder but possible with specialist lenders.

Yes, if you have 2+ years of bonus history. We average the past 2 years and present it conservatively. Some bonuses get counted at 50% to be conservative with variable compensation.

ESPP is counted as deferred compensation. If your company matches or you have a discount, we value it as part of total compensation package.

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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Guarantor Home Loans — Buy With No Deposit Using Family Equity