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Family Guarantee Home Loan


How Does a Family Guarantee Home Loan Work?


Are you looking for a home loan with little or no deposit? A family guarantee home loan eliminates the need for a deposit, and might be just what you need. You can borrow up to 105% of the property purchase price as long as you and the family member who is acting as your guarantor meet some basic eligibility requirements.


Why get a family guarantee home loan?


There are many benefits to obtaining a family guarantee home loan. The major advantage is that you do not have to wait to get into the property market, as with a family member guaranteeing your loan, you can borrow up to 105% of the property purchase price without a deposit.


This means that rather than waiting months or years to save up for a hefty deposit, you can get started on the path to owning your own home straight away, rather than paying off your landlord’s mortgage with your rental payments. In some cases, it makes more financial sense for you to buy your own home, particularly if your rent takes up a large proportion of your monthly income.


Am I eligible for a family guarantee home loan?


Eligibility criteria will vary from lender to lender, but generally, you need to have a good credit history, and be able to show a solid employment record. For a 105% family guarantee home loan, you generally need to prove the following:


  • Employment. Lenders will want to see a good employment history, and you should usually not be in the probationary period of a new job when applying for the home loan.
  • Credit history. Your credit history should be clean, with no defaults, though repaid defaults might be acceptable.
  • Income. You need to demonstrate sufficient income to show that you can make the repayments.
  • Property. The property to be purchased should be a residential property.
  • Asset position. You usually need to have a positive asset position, in which your assets are greater than your total liabilities.


Who is eligible to guarantee me?


For a family guarantee home loan, you need to have an immediate family member act as guarantor. Your parent, sister, or brother is eligible. Friends and non-immediate family members such as cousins are not generally accepted as guarantors for this type of loan.


Additionally, your guarantor is required to have a clean credit history. They need to own property in Australia, and have sufficient equity built up in that property to cover 20% of your purchase price.




What about costs of purchase?


You can borrow enough to cover the costs of purchase, such as stamp duty and legal fees, which means you can end up paying much less out of pocket than you realise. The total cost of your property purchase, including your deposit, can be funded completely from your loan.


How do I get started?


If you have been looking for a family guarantee home loan, we can assist you. Contact ABC Mortgages today for a free discussion about your eligibility, and to find out whether this is the right loan for your requirements. We are happy to take you through the entire application process, starting from assessing your eligibility to finalising all the paperwork.