Buying Property with a Guarantor – Pros, Risks and Real Stories
Buying a property with a guarantor can be a game changer for many Australians, especially young families and first-home buyers.
What is a guarantor loan? A guarantor is someone (usually a close family member) who uses their property’s equity to secure your home loan. They don’t hand over cash — just act as security, reducing your deposit requirements and potentially avoiding LMI (Lenders Mortgage Insurance).
The benefits:
Buy sooner, even with a smaller deposit
Avoid the costly LMI premium (often $10,000+)
Potential access to more competitive loan products
The risks:
The guarantor is legally responsible if you default on the loan
May limit their ability to borrow in the future
Emotional pressure — clear communication is essential
Real stories: Take Sarah and Luke, a young couple from Terrigal dreaming of their first home. With rising prices and limited savings, their goal seemed out of reach, until Sarah’s dad, Paul, offered to be their guarantor. Using the equity in his mortgage-free home, Paul secured 20% of their loan, allowing them to avoid LMI and get approved faster.
At iChoice, we guided the family through every step: ensuring Paul received independent legal advice, structuring the guarantee to be limited (not the entire loan), and mapping out a plan for the guarantee to be released once enough equity was built.
Sixteen months later, Sarah and Luke’s property had grown in value, and they’d paid off a solid chunk of their loan. With a refinance, we helped remove Paul as guarantor, giving him peace of mind and them full independence.
This is why legal agreements and expert advice are crucial. Guarantor loans can fast-track home ownership, but they come with real financial responsibilities. At iChoice, we make sure families are protected and empowered every step of the way.
A guarantor loan isn’t for everyone, but with the right support and careful planning, it can open the door to home ownership far sooner than you thought possible.