In todayās property market, saving a 20% deposit can feel impossibleāespecially for first home buyers in Queensland. But thereās a powerful solution you might not know about: parental guarantor loans.
With the right support and structure, you could skip lenders mortgage insurance (LMI), boost your borrowing power, and buy soonerāall without your parents handing over cash.
At Gardian Finance, weāve helped many Mackay families make this work safely. Here's how.
š” What Is a Parental Guarantor Loan?
A parental guarantor loan (often called a family pledge or family guarantee loan) allows a parentāor close family memberāto use the equity in their own property as security for part of your home loan.
Rather than gifting you money, they guarantee a portion of your loanāusually enough to cover the 20% deposit threshold. This can help:
Eliminate lenders mortgage insurance (LMI)
Increase your borrowing capacity
Allow you to enter the market sooner
š Is It Safe for Parents?
When set up correctly, it can be a low-risk strategy for both sides.
The guarantee typically covers only the deposit portion (not the entire loan).
As you pay down your loan or the property grows in value, your parents can be released from the guarantee.
Many lenders allow partial guarantees, giving your parents more control over how much theyāre putting at risk.
At Gardian, we work with both the home buyer and the guarantor to make sure everyone understands the structure and the safety measures.
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Who Can Be a Guarantor?
Usually, the guarantor must be:
A parent or close family member
An Australian citizen or permanent resident
Financially stable with sufficient equity in their own home
š What Are the Pros and Cons?
Pros for First Home Buyers:
Enter the market without saving a full deposit
Avoid costly LMI (which can be tens of thousands)
Start building equity sooner
Considerations for Parents:
Their property is partially tied to your loan (temporarily)
They need to understand the legal and financial implications
A solid, trusting relationship is essential
šØāš©āš§ Real Talk: Itās a Big StepāBut Itās Helping Families Win
Weāve seen it time and again in Mackay: families working together to help the next generation into the market. With careful planning and advice, a guarantor loan can be a smart financial moveānot just a generous one.
š¬ Thinking About Using a Guarantor?
Talk to Gardian Finance. Weāll guide you through:
Whether a guarantor loan suits your situation
What your borrowing power looks like
How to protect both the buyer and guarantor
Weāre here to make sure your first home journey starts with clarity and confidence.
š Contact us today for a no-obligation chat.
