Finty

Compare guarantor home loans

Enter your loan and deposit to see the rate and repayment you'd get on 337 guarantor home loans, and how much a lower rate could take off your repayments.

Home loans where the lender says you can add a guarantor, usually a parent who backs the loan with their own home. A guarantee can let you buy with a small deposit, often without lenders mortgage insurance.

Written byDavid Boyd

What would your repayments be?

Enter your loan and deposit, and we'll find each lender's rate for you and work out the monthly repayment over 30 years.

63 loans

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Each loan shows its lowest published variable rate for your choices and deposit. Repayments are over 30 yearsand include any monthly fee. Fixed repayments are worked out as if the fixed rate ran for the whole loan. The rate you're offered depends on your circumstances. Comparison rates are for the lender's example loan of $150,000 over 25 years.

WARNING: A comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Guarantor home loans at a glance

Worked out from the 337 loans from 37 lenders we compare on this page.

Typical variable rate

7.04%

Across the 63 loans for a home you live in, with a 5% deposit. Half sit between 6.94% and 7.27%.

With an offset account

114 of 337

292 loans let you redraw extra repayments.

Typical upfront fees

$686

8 of 324 loans charge none.

No annual fee

7 of 97

loans that state an annual fee set it at $0.

How variable rates are spreadNumber of loans in each band. The most common is 7–7.5%.

The short version

  • A guarantor, usually a parent, backs your loan with their own home.
  • It can let you buy with a small deposit or none, often without lenders mortgage insurance.
  • Your guarantor could have to pay if you can't.

How a guarantor home loan works

A guarantor, usually a parent, uses the equity in their own home as extra security for your loan. With a guarantee, many lenders let you borrow up to the full price of the home, or more, without paying lenders mortgage insurance.

Most guarantees are limited to part of the loan, such as the amount above 80% of the property's value. Once you've paid the loan down, or the home has grown in value, you can usually ask the lender to release the guarantor.

The risk for your guarantor

If you can't repay and the sale of your home doesn't cover the debt, the lender can ask the guarantor to pay the difference, and in the worst case sell their property. Lenders usually ask guarantors to get independent legal advice first.

Pros

  • Buy sooner, without saving a 20% deposit.
  • Often no lenders mortgage insurance.
  • The guarantee can usually be released once you've paid the loan down.

Cons

  • Puts your guarantor's home at risk.
  • You still need to show you can afford the repayments.
  • Can strain family relationships if things go wrong.

Alternatives

  • The government's 5% Deposit Scheme, for first home buyers.
  • Saving a larger deposit, or a gift from family instead of a guarantee.
  • A low deposit loan with lenders mortgage insurance.

How to apply

Most people get pre-approval for a guarantor home loan before they make offers, then full approval once they've found a home.

  • Get your documents together: payslips, bank statements showing your savings, and details of your debts and credit card limits.
  • Get pre-approval. It tells you how much you can borrow and usually lasts three to six months.
  • Find the home and sign the contract. The lender values the property before it gives full approval.
  • Your guarantor will need their own documents, and usually independent legal advice.

What to compare

  • Who can be a guarantor. Most lenders accept parents, and some accept other close family.
  • How much of the loan the guarantee covers, and how it's released.
  • The comparison rate and fees, as with any home loan.

Questions people ask

Who can be a guarantor?

Most lenders accept parents. Some accept other close family, such as a grandparent or sibling. They usually need equity in their own home.

How do I release the guarantor?

Once your loan is at or below about 80% of your home's value, you can usually ask the lender to remove the guarantee. The lender may value the home first.

Why does the comparison rate differ from the interest rate?

The comparison rate adds the lender's standard fees to the interest rate, worked out on a $150,000 loan over 25 years. It's a fairer guide to cost, though it leaves out some fees, such as break costs.