First Home Buyers
First Home Buyers
May 28, 2025
by

Nude Home Loans

Guarantor Home Loan Explained

Guarantor Home Loan Explained

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.

need a loan?

Let's strip that down together

The Road To Home Ownership Starts With A Single Step.

Nude Home Loans was established with one primary goal - Let's get every Australian into the property market.

We believe the best way to do this is by providing you with the tools and information to make an informed decision about your home loan without the stress or hassle commonly associated with the process.

We strive to make your journey to home ownership an easy and enjoyable one, because it is an exciting journey, and we believe it is something to celebrate.

need a loan?

The Road To Home Ownership Starts With A Single Step.

Nude Home Loans was established with one primary goal - Let's get every Australian into the property market.

We believe the best way to do this is by providing you with the tools and information to make an informed decision about your home loan without the stress or hassle commonly associated with the process.

We strive to make your journey to home ownership an easy and enjoyable one, because it is an exciting journey, and we believe it is something to celebrate.

need a loan?

The Road To Home Ownership Starts With A Single Step.

Nude Home Loans was established with one primary goal - Let's get every Australian into the property market.

We believe the best way to do this is by providing you with the tools and information to make an informed decision about your home loan without the stress or hassle commonly associated with the process.

We strive to make your journey to home ownership an easy and enjoyable one, because it is an exciting journey, and we believe it is something to celebrate.

Nude Home Loans Pty Ltd
ACN 670 555 030 is credit representative number 554048 of Buyers Choice Licensing Pty Ltd ACN 626 172 281 (Australian Credit Licence No. 509484).

Nude Home Loans Pty Ltd
ACN 670 555 030 is credit representative number 554048 of Buyers Choice Licensing Pty Ltd ACN 626 172 281 (Australian Credit Licence No. 509484).

Nude Home Loans Pty Ltd
ACN 670 555 030 is credit representative number 554048 of Buyers Choice Licensing Pty Ltd ACN 626 172 281 (Australian Credit Licence No. 509484).