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Homebuyers, are you struggling to save enough of a deposit to buy a home? Is your deposit not enough to meet the loan to value ratio required for your home loan? If so, a guarantor home loan may be the solution for you.

This article will break down the in’s and out’s of guarantor home loans. We’ll cover how ScaleMortgage can help you find the right loan for your needs.
Helping hands reaching towards a home in warm light, symbolising guarantor support for homebuyers with ScaleMortgage Guarantor Home Loan.

What Is a Guarantor Home Loan?

A guarantor home loan is a type of loan where a family member or close friend acts as a co-signer for the loan. This means that they provide a guarantee for the loan, using their own property as security. Its a great option which can help new buyers to enter the property market with the help of their family members.

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How Does a Guarantor Home Loan Work?

A guarantor home loan works by using the equity in the guarantor’s property as security for the loan. If the borrower cannot repay the money, the guarantor may have to use their property to cover the loan. This means that the person who guaranteed the loan is responsible for paying it back if the borrower cannot. The guarantor may have to sell their property to cover the debt.

The guarantor is not required to provide funds upfront. They just need enough equity in their property to cover the loan. The amount of equity required will depend on the lender and the loan amount.

Why Choose a Guarantor Home Loan?

There are several benefits to choosing a guarantor home loan, including:

Who Can Be a Guarantor?

Not just anyone can be a guarantor for a home loan. Most lenders have specific requirements for who can act as a guarantor, including:

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Guarantor Home Loan Requirements Australia?

The requirements for a guarantor home loan will vary depending on the lender, but some common requirements include:

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With over 20 lenders and 1000+ loan products available you have access to some of the best guarantor home loans on the market. We look closely at your situation to understand your needs and goals. We’ll help you find the right loan to buy your dream home.

What Are the Risks of a Guarantor Home Loan?

While a guarantor home loan can be a great option for those struggling to save for a deposit, there are some risks involved. It’s important to understand these risks before entering into a guarantor home loan.

How to Apply for a Guarantor Home Loan

Applying for a guarantor home loan is similar to applying for a traditional home loan. You will need to provide proof of income, assets, and liabilities, as well as details about the property you wish to purchase.
You will also need to provide details about your guarantor, including their income, assets, and liabilities, as well as proof of ownership of their property.

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How much deposit do I need if I have a guarantor?

A guarantor mortgage allows you to buy a property with a deposit of less than 20% or no deposit at all. This means you can avoid paying for Lender’s Mortgage Insurance (LMI).

Can I borrow 100% of a home loan with a guarantor? (Guarantor home loan no deposit)

Yes, having a guarantor allows you to potentially borrow up to 100% of the property value. The actual amount can be more favourable with an initial deposit, reducing the financial commitment required from your guarantor.

Do you need a deposit if you have a guarantor?

Not necessarily. A guarantor can enable you to borrow the full purchase price of the property. However, any deposit you provide can lessen the guarantor’s obligation, offering more security to the lender.

How long does a guarantor stay on a mortgage?

Guarantors are typically part of the loan agreement for two to five years. The duration depends on the loan’s repayment progress and the property’s appreciation. The value of the property must rise sufficiently to ensure there is enough equity to release the guarantor.

How much can I borrow if my parents go guarantor?

If a parent or relative acts as a guarantor, you might be eligible to borrow up to 100% of the property’s value, subject to lender policies and the guarantor’s financial health.

What is the 3 day guarantor rule?

You’ll have at least three days to review the guarantor agreement. The period can be shortened if you receive independent legal advice or if the guarantee pertains to specific roles like sole director or trustee guarantor situations.

What are the disadvantages of a guarantor loan?

While advantageous, guarantor loans may carry higher interest rates compared to other loan types. It’s crucial to explore all borrowing options to ensure this is the most cost effective choice for you

Is it risky to be loan guarantor?

Yes, being a guarantor involves significant risk. Your financial standing is on the line for the borrower’s debt, making it essential to fully trust the borrower and understand your obligations and risks.


A guarantor home loan can be a great option for those struggling to save for a deposit or get approved for a traditional home loan. With the help of a guarantor, you may be able to secure a loan with a lower deposit, avoid paying LMI, and get a lower interest rate.
However, it’s important to understand the risks involved and seek financial and legal advice before making any decisions. At ScaleMortgage, we can help you navigate the world of guarantor home loans and find the right loan for your needs. Contact us today to learn more.

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