Using a guarantor to help purchase property
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.
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.
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:
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.
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.
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.
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.
