How Family Guarantor Loans Can Help First Home Buyers Get Into the Property Market Sooner

Buying a home can feel overwhelming, especially with rising property prices and the challenge of saving for a hefty deposit. But did you know that with a family guarantor, you could step into your first home sooner than you think? At SW Brokerage, we specialise in guiding first home buyers through the process of using family equity to make home ownership a reality.

What is a Family Guarantor Loan?

A family guarantor loan allows a close family member—usually parents—to use the equity in their property as security for part or all of your home loan. This can help you:

  • Avoid the need for a 20% deposit
  • Skip paying Lenders Mortgage Insurance (LMI), which can save you thousands
  • Access better interest rates due to the reduced risk for the lender

How Does It Work?

From a bank lender’s perspective, a family guarantor loan reduces the risk associated with lending to a first home buyer who might not have a large deposit. The guarantor (your parents, for example) offers a portion of their home’s equity as additional security for your loan. Importantly, this doesn’t mean they’re handing over cash—their property simply acts as a backup for the bank.

Here’s how the process typically works:

  • Property Assessment: The lender will assess the value of your guarantor’s property to determine how much equity can be used.
  • Loan Structuring: Part of your loan is secured against your new home, and the remainder against your guarantor’s property.
  • Approval & Purchase: Once approved, you can move forward with purchasing your property, often with a smaller deposit or even no deposit.
  • Releasing the Guarantor: Over time, as you pay down your mortgage or your property increases in value, we can help you refinance and release your guarantor from the loan.

How SW Brokerage Helps First Home Buyers

At SW Brokerage, we understand that navigating guarantor loans can be complex. That’s where our expertise comes in. Our experienced brokers on the Brisbane and Gold Coast have guided countless first home buyers through the guarantor process, ensuring every step is clear and stress-free.

Here’s how we help:

  • Step-by-Step Guidance: Using the “SW Way,” we walk you through each stage of the guarantor loan process.
  • Tailored Advice: We assess your unique situation and recommend the best lender and loan structure.
  • Long-Term Planning: We don’t just help you get into your first home—we also guide you on when and how to release your guarantor, cutting the tie between you and your parents’ property when the time is right.

Benefits of Family Guarantor Loans

  • Faster Entry into the Market: No need to wait years to save a 20% deposit.
  • Avoid Lenders Mortgage Insurance (LMI): Save thousands by bypassing LMI costs.
  • Better Loan Terms: Enjoy more favourable interest rates with less upfront risk.

The Rising Value of Family Homes

With property values across Australia—especially in Brisbane and the Gold Coast—having increased significantly over the years, many parents are sitting on substantial equity. According to recent RP Data, median house prices in Brisbane have risen by over 30% in the past three years, while the Gold Coast has seen similar growth. This means many families are in a strong position to help their children enter the property market without major financial strain.

When to Release the Guarantor

One of the most common questions we get at SW Brokerage is, “When can we release the guarantor?” Typically, once your loan-to-value ratio (LVR) drops below 80% due to loan repayments or an increase in your property’s value, you can refinance and remove the guarantor’s security. We’ll work with you to monitor your progress and ensure you’re ready to make this move when the time is right.

Why Choose SW Brokerage?

  • Local Expertise: With offices in Brisbane and the Gold Coast, we know the local market inside out.
  • Experienced Brokers: Our team has years of experience helping first home buyers and families navigate guarantor loans.
  • Personalised Service: We believe in building relationships and providing tailored advice that suits your unique situation.

Ready to Get Started?

If you’re considering using a family guarantor to buy your first home, or you’re a parent wanting to help your kids into the market, SW Brokerage is here to guide you every step of the way. Contact us today to learn how we can make your homeownership dreams a reality – the SWB Way