Buy a home with a 2% or 5% deposit and pay no LMI under the Home Guarantee Scheme. Speak to a Loan Market broker to see if you are eligible.
Saving for a deposit is often the biggest hurdle to owning your own home. But what if you didn’t have to wait years to get into the market?
Guarantor home loans are also commonly referred to as a ‘Family Pledge,’ ‘Security Guarantee,’ or ‘Family Guarantee.’ While the names differ, the core concept remains the same: using family equity to secure your future.
A guarantor loan lets a family member (usually a parent or close relative) use the equity in their own home to help secure yours. It’s a powerful way to get the keys to your first home sooner, often with little to no cash deposit required.
Here is how it helps you make it yours:
Essentially, your guarantor helps “top up” your deposit using their property equity. This means you might only need a small cash contribution (in some cases no deposit) to reach the 20% deposit threshold. By bridging this gap, you can qualify for your loan sooner and avoid the extra cost of lenders mortgage insurance (LMI).
Becoming a guarantor is a significant way to help a family member get into the market sooner. Generally, a guarantor is a family member who owns a property with sufficient equity.
It’s important to understand the commitment. As a guarantor, you are legally responsible for the portion of the loan you’ve guaranteed. If the borrower misses payments, you could be liable, and in extreme cases, the security property could be at risk. This is why we recommend all guarantors seek independent legal advice – we want both you and the borrower to feel confident and secure before moving forward.
It doesn’t have to be forever. A guarantor arrangement is a bridge, not a permanent tie. Once the borrower builds sufficient equity in their property, they can refinance to release the guarantor from the loan contract. We can also explore ‘limited guarantees’, where your liability is capped at a specific percentage.
No. The Home Guarantee Scheme is not a shared-equity program. The Australian Government acts as a guarantor for up to 15% of the property value so you can avoid Lenders Mortgage Insurance (LMI). You maintain 100% ownership and equity in your property.
Yes. You can combine the guarantee with state-based assistance like the First Home Owner Grant (FHOG), stamp duty concessions or exemptions, and the First Home Super Saver (FHSS) scheme, as long as you meet the eligibility criteria for each program in your state or territory.
The government guarantee remains active only while you occupy the property as your primary residence and stay with your original lender. If you refinance to a non-participating loan, sell the home, convert it into an investment property, or your loan-to-value ratio drops below 80%, the government guarantee ceases.
