Using a Guarantor

At Horizon, our Family Equity Loan allows borrowers to have a guarantor, and can be used for any of our owner-occupied or investment loans. Becoming a guarantor for a loved one’s loan can be a meaningful way to help them achieve their dream of property ownership. It allows parents to provide a guarantee, by using the available equity in their home or investment property to provide additional security. This helps to cover any borrowing shortfalls between the deposit and loan amount1 for their children's loan.

How does it work?

If you are struggling to save a 20% deposit, or cannot afford Lender’s Mortgage Insurance (LMI), a guarantor can help you borrow up to 100% of a property's purchase price. This means first home buyers may secure a property with a smaller deposit.

The guarantor offers a portion of the equity in their own property as additional security for your loan, rather than contributing a cash payment.

Important to know: A guarantor supports the loan’s security, not its affordability. They cannot help with meeting income requirements for the loan.

Who is eligible?

For the borrower, the property can be owner occupied or an investment property.

Guarantors are typically individuals with a stable financial history. This often includes:

  • Having a steady income or sufficient assets.
  • Owning property (outright or with an existing mortgage).
  • Possessing good credit.

Most guarantors are family members or close relatives. Parents frequently act as guarantors for their children to help them get onto the property ladder.

Occasionally, other trusted individuals, like extended family, can also step in, provided they meet the eligibility criteria.

Important information for Guarantors

Becoming a guarantor is a big decision, and evaluating your financial situation is essential before agreeing to help. Seek independent legal and financial advice to fully understand the terms of your guarantor responsibilities. To be released, you can formally apply to be removed as a guarantor once the conditions are met. Most lenders approve the release of guarantors from their obligations once the borrower reaches an 80% loan-to-value ratio (LVR).

While acting as guarantor, your own ability to borrow may be reduced.

Frequently Asked Questions

Is the Family Equity Loan available on all home loans?
Yes

Where can I find your home loans?
View our home loans

Can first home buyers apply?
Yes, using a guarantor as a first home buyer may help you break into the property market

How is the amount of the guarantee determined?

A guarantee is required for the portion of borrowings above 80% of the value of the borrower’s security.

Have a question?

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Why choose us?

Important Information:

1. Family members who can provide their property as security include parents, grandparents, siblings, sons and daughters. The Family Equity Loan is not available for existing loans or refinances. A Registered First Mortgage or second mortgage over purchased property and family member's property is required.