Complete guide to guarantor home loans in NSW. Learn how parents can help children buy their first home without gifting money.
Guarantor loans allow first home buyers in NSW to purchase property with no deposit and avoid Lenders Mortgage Insurance (LMI), potentially saving $20,000-40,000. Parents or family members use their property equity as security without needing to provide cash.
This guide explains how guarantor loans work, risks and benefits, and strategies for successfully using family guarantee to enter the property market.
Parents use equity in their home (typically 20% of child's purchase price) as additional security. Once child builds 20% equity through repayments and growth, guarantee is removed (typically 2-5 years).
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What you can ask:
| Purchase Price | $750,000 |
| Loan Amount (100% + costs) | $780,000 |
| Buyer's Deposit | $0 |
| Guarantor Security Required | $150,000 |
| Parents' Home Value | $1,200,000 |
| Parents' Loan Balance | $200,000 |
| Parents' Available Equity | $800,000 |
Parents guarantee is limited to $150,000 (20% of purchase). Their exposure reduces as child builds equity.
Guarantor loans provide a powerful way for NSW first home buyers to enter the market faster without needing a large deposit. With proper structure and clear communication, it's a low-risk way for parents to help children buy their first home.
Considering a guarantor loan? Book a consultation to discuss options and structure the loan correctly.
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