Saving up for a house feels nearly impossible these days because of rising property prices, bills, rent and cost of living. But there’s a way to help you get started with your home-buying journey.
Family guarantee is one of the options that lets a family member use the equity in their own home to help secure part of your loan. Which means you don’t need to save a massive deposit or pay expensive Lenders Mortgage Insurance.
In this blog, let’s talk about how Family Guarantee works and how you can apply so you can secure your dream property.
Understanding the Power of Family Guarantee in Home Buying
For many first-time buyers, getting into the property market feels like a marathon.
But with the help of family guarantee, buyers who don’t have 20% deposit but have strong income and steady jobs can get into the property market.
The deal with family guarantee is that a close relative, usually a parent, will use the equity in their own home to back a portion of your loan. They’re not handing you money or will buy a house with you. They will only act as your guarantor.
Family Guarantees vs. Traditional Home Buying
Let’s do a quick comparison.
With a traditional loan, you need a 20% deposit to avoid extra fees. So if the house costs $500,000, you’d need a $100,000 deposit. For most people, that’s a long, hard slog.
But with a family guarantee mortgage, that pressure eases.
Here’s what changes:
- You can buy a home with far less upfront cash
- You might get better interest rates
- You can skip Lenders Mortgage Insurance, which can save you thousands
- You’ll likely get into the market years earlier than you would otherwise
Over time, as you make repayments and build equity in your new home, the guarantee can be removed. Usually, that happens once you own at least 20% of the property.
Step-by-Step Guide to Leveraging a Family Guarantee
Here’s how to actually make this work in real life—without the stress.
1. Start the Conversation
Bring it up with your parents or a family member in a casual but respectful way.
Explain what a family guarantee means. They’re not giving you cash—they’re just allowing the bank to use their home as part of the loan security.
Be honest about the risks too. If you stop paying your loan, your home could be on the line. That’s why it’s so important to make sure everyone fully understands what’s involved.
2. Get Your Finances in Order
Before you talk to a lender, make sure you’ve got your financial ducks in a row.
That means checking your credit score, sorting out your budget, and having a good understanding of what repayments you can actually afford.
The stronger your position, the better your chances of securing a good loan.
3. Talk to a Mortgage Broker
Find a broker who understands guarantor mortgages. They’ll guide you through the process, explain the options available, and help you compare different lenders.
Not all banks offer family guarantee home loans, and those that do may have very different rules.
4. Understand the Guarantee Limits
Most lenders only require the family guarantee to cover 20% of the purchase price (plus maybe stamp duty or fees). That means your guarantor’s risk is limited—not the full loan.
Ask the broker or lender what their process is for eventually releasing the guarantee once your loan balance drops below 80% of the property value.
Finalising Your Home Loan & Securing Your Property
Once the plan is in motion, it’s time to get everything moving.
Here’s what that typically looks like:
- Submit your home loan application with all your documents
- Provide details and valuations for both your property and the guarantor’s
- Review the loan contract with your guarantor
- Get independent legal advice for both of you (most lenders will require this)
- Set up a repayment plan that allows you to build equity and release the guarantee as quickly as possible
Keep track of your progress, and once you hit that magic 20%, apply to remove the guarantee.
That’s when your family member is officially off the hook—and you’re fully flying solo as a homeowner.
Conclusion
Using a family guarantee could be the move that finally gets you onto the property ladder—without needing to wait years or drain every dollar from your savings account.
It’s a smart, flexible option that’s helped many first home buyers unlock opportunities that would’ve otherwise felt out of reach.