Your loan has been approved.

The five words every active buyer wants to hear. But the struggle to get there is greater for some over others, which is where using a guarantor comes in.

Guarantor loans allow a customer to borrow up to 100 per cent of the value of a property, plus it can also cover costs such as stamp duty and legal feels. So essentially, you can borrow without having to have a deposit, subject to the terms of the lender of course.

I worked with a client recently who had $50,000 saved. For what he wanted to buy, it simply wasn’t enough. When you added in the cost of stamp duty, he didn’t even have 5% deposit. So, we looked at his options and it turned out the right one was using a guarantor. He got approved for $700,000, was able to buy his property, cover stamp duty and legal fees and he even had enough to buy furniture. What’s more, his guarantor is only liable for 20% of the loan, reducing the risk for them.

Four things a guarantor loan could do for you
  • The obvious one is that you can get a foot in the market, without needing deposit.
  • You can avoid mortgage insurance and potentially save thousands
  • You could get access to a cheaper rate
  • Depending on the bank, a guarantor doesn’t necessarily have to be a parent

Guarantor loans carry risks for both the borrower and the person guaranteeing the loan. Seeking out the right advice is an absolute must.