Saving a 20% deposit can feel like the biggest hurdle to buying a home — especially with rising property values and everyday living costs.
For some Mackay buyers, a guarantor home loan can provide a pathway into the market sooner.
But how does it actually work — and is it the right move for you?
Let’s break it down.
🤝 What Is a Guarantor Home Loan?
A guarantor loan allows a close family member (usually parents) to use the equity in their property as additional security for your home loan.
This can help you:
✔️ Avoid paying Lenders Mortgage Insurance (LMI)
✔️ Buy with a smaller deposit
✔️ Enter the market sooner
Instead of gifting money, the guarantor offers part of their home’s equity as security.
💰 How It Helps You Buy Sooner
Typically, lenders prefer borrowers to have a 20% deposit to avoid LMI.
With a guarantor:
You may be able to purchase with a much smaller deposit (sometimes 5% or less).
The guarantor secures the shortfall.
You potentially save thousands in insurance costs.
This can make a significant difference for first-home buyers in Mackay trying to compete in the market.
⚠️ What Are the Risks?
A guarantor loan is a serious financial commitment.
If the borrower cannot meet repayments:
That’s why it’s crucial that:
Everyone receives independent legal advice.
The risks are clearly understood.
The loan structure is set up correctly from the start.
🔓 Can a Guarantor Be Removed Later?
Yes — in many cases.
Once:
The property increases in value, or
The loan balance reduces enough,
You may be able to refinance and remove the guarantor from the loan.
The goal is usually to make the arrangement temporary, not permanent.
📍 Is It Right for Mackay Buyers?
A guarantor loan can make sense if:
✔️ You have stable income
✔️ You can comfortably afford repayments
✔️ Your guarantor understands the risks
✔️ You want to avoid years of saving
However, it’s not suitable for every family situation.
The right structure is critical — and professional advice is essential before moving forward.
🧠 The Smart First Step
Before discussing it with family, it’s wise to:
Understand your borrowing capacity
Know how much security would be required
Review repayment affordability
Compare lender policies
Every lender treats guarantor loans differently.
If you’re considering this pathway, we can help you explore the numbers and structure it safely.
