Property Purchase Loans
Can You Use A Guarantor?
5 min read- Finance Guide
- Updated 2026
Quick answer
A guarantor may help you buy with as little as
5% deposit
In some lender structures with family support
- Common guarantor type Family guarantee
- Support offered Property or cash
- Goal Reduce deposit pressure
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Detailed explained
A guarantor home loan is still a standard property purchase loan, but with an added support structure. Instead of relying only on the borrower's deposit and the new property as security, the lender may also rely on a guarantor's property or cash to cover part of the risk. This can help a buyer get approved sooner, buy with a smaller deposit, or keep the loan below an effective 80 percent loan to value ratio for the lender's risk assessment.
How guarantor security usually works
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The borrower buys the property in their own name and remains responsible for the loan repayments
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The guarantor usually offers part of the equity in their own property as additional security
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This support may reduce the cash deposit needed and may help avoid lenders mortgage insurance in some cases
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Many lenders prefer a limited guarantee that covers only a defined part of the debt rather than the whole loan
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GUARANTOR SNAPSHOT
-
Buyer cash deposit
can be lower
-
Family backed security
adds support
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Important
A guarantor does not replace income, credit and servicing checks
How a guarantor application usually works
Pre-Approval
01
Borrower and guarantor discuss whether support is appropriate and how much is needed
Property
02
The lender reviews both the purchase and the guarantor property or cash position
Valuation
03
Valuations may be ordered on the purchased property and the guarantor security property
Settlement
04
Formal approval is issued once servicing, security, guarantor documents and policy checks are satisfied
What lenders usually assess
Borrower servicing
The buyer still needs income that supports the loan under lender policy
Guarantor equity
The lender checks the guarantor has enough usable equity in their property or cash security
Guarantor liabilities
Existing debts secured against the guarantor property affect how much support is available
Relationship and purpose
Many lenders restrict guarantor lending to close family support for owner occupied purchases
Credit history
The borrower's credit conduct still matters and the guarantor may also be assessed
Exit strategy
Lenders want a path to release the guarantee later, often after debt reduction or value growth
Guarantor risk warning
If the borrower cannot repay, the guarantor may become responsible for the guaranteed amount and could risk the asset used as security
Need Help with your Property Purchase?
From guarantee offer to later release
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01. The borrower signs the loan documents and the guarantor signs guarantee and security documents
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02. Independent legal advice is often recommended or required before the guarantee is accepted
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03. At settlement, the loan completes and the lender takes the agreed security over the purchased property and any guarantor security
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03. The guarantee can often be released later once the loan balance falls or the property value rises enough to satisfy lender policy
Common problems
Guarantor loans can be helpful, but they are more sensitive to policy, documentation and family risk. Problems usually arise when equity is not as strong as expected, the guarantor does not fully understand the risk, or there is no clear exit path.
Not enough usable equity
The guarantor may own property, but existing debt and conservative valuations can reduce the amount of support available.
Possible solutions include:
Reduce the purchase price- Check the guarantor property debt position early
- Use more cash contribution if possible
- Choose a lender that offers suitable family guarantee structures
Borrower still does not service
A guarantor strengthens security, but it does not fix a loan that is unsuitable because repayments are too high.
Possible solutions include:
- Reduce unsecured debts
- Improve the borrower budget position
- Provide complete income evidence
- Restructure to a lower loan amount
Guarantor risk and family pressure
The structure can become problematic if the guarantor does not understand they are taking on legal liability without owning the purchased property.
Possible solutions include:
- Use a limited guarantee where possible
- Ensure legal advice is obtained before signing
- Agree on an exit plan before committing
- Review whether a non guarantor option is safer
Steps to use a guarantor
Step
01
Work out how much deposit shortfall exists and whether a guarantor is actually needed.
Step
02
Check lender policy for guarantor loans and obtain an early borrowing assessment.
Step
03
Confirm the guarantor property, available equity and any existing debt secured against it.
Step
04
Submit borrower and guarantor documents, including identification, income and property details.
Step
05
Complete valuations, approval conditions, guarantee documents and any required legal advice.
Step
06
Settle the purchase, then review later when the guarantee may be released.
Speak with a Property Finance Specialist
Guarantor lending can vary depending on the borrower's income, deposit gap, lender policy, the guarantor's equity, and whether the purchase is owner occupied or investment.
A specialist can review the structure and help identify lenders that may accept it and explain the trade offs clearly.
Speak with a finance specialist about using a guarantor for property purchase
Submit the short form below and a property finance specialist will review your situation and discuss whether a guarantor structure may be suitable.
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