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.