What to Know About Using a Guarantor for Your First Home
Don’t have a big deposit yet? A guarantor loan could get you into your first home sooner — no LMI, no long wait.
But it’s not something you want to jump into blind.
At Nude Home Loans, we’ve helped dozens of first home buyers use a guarantor the right way — with clarity, structure, and support.
Here’s everything you (and your family) should know.
🏡 What Is a Guarantor Home Loan?
A guarantor loan lets someone (usually a parent) use the equity in their home to secure your loan.
That means:
You can often borrow up to 100% of the purchase price
You don’t pay Lenders Mortgage Insurance (LMI)
You may not need any cash deposit at all
The guarantor doesn’t hand over cash — they offer a portion of their property as extra security.
👨👩👧 Who Can Be a Guarantor?
Parents (most common)
Siblings (less common)
Grandparents (sometimes)
Lenders prefer close family and will usually need to see that they:
Have enough equity in their home
Can handle the risk if something goes wrong
🧠 What Are the Risks?
For the buyer:
You still need to meet all loan repayments yourself
If you default, your guarantor is legally responsible for part of the debt
For the guarantor:
Their property is on the hook (up to the guaranteed amount)
If the borrower defaults, the bank can pursue them to recover losses
This is why it’s important to:
Be super clear about responsibilities
Get legal advice (most lenders require it)
Have a clear exit plan for removing the guarantee
✅ How to Use a Guarantor Loan Safely
At Nude, we help structure it in a way that protects everyone:
Step 1: Define the Guarantee Amount
Usually 20% of the purchase price (just enough to avoid LMI)
Not the whole loan amount
Step 2: Choose a Split Guarantee If Needed
Some lenders let you split it between equity and a small cash deposit
Good option if buyer has some savings
Step 3: Plan for Release
Once your loan balance drops below 80% of the property value
You can refinance and remove the guarantor
We help track this and time the switch right
🏠 Real Example: Dan in Geelong
Dan had a stable job but only $15k saved. His parents had a paid-off home worth $700k.
We:
Set up a guarantor loan with their help
Got Dan into a $520k townhouse with no LMI
Built a 3-year plan to remove the guarantee
Everyone understood the deal — and now Dan’s a proud owner.
“The team at Nude made it simple, safe, and stress-free — even for my folks.”
📋 FAQs
Do my parents go on the loan?
No. They’re not borrowers — just guarantors.
Can they be removed later?
Yes, once you’ve built enough equity or reduced your loan.
Is this risky?
Like any loan, it carries risk — but with good planning, it can be a smart move.
✅ Want to Explore a Guarantor Option?
We’ll:
Check your eligibility
Run the numbers
Help your family understand exactly what’s involved
👉 [Book a free guarantor loan session with Nude Home Loans]
Smart home buying, with family by your side.