Family Guarantee Home Loans to Cover Shortfall in Deposit

Family pledge or family guarantee home loans allow you to utilise a family member’s home as security for your home loan, meaning that you don’t need a huge deposit. It is a loan that allows the shortfall in your deposit to be secured by a family member’s property. It allows family members to assist you without giving you cash or putting cash in and only offering security guarantee. To give an example, the family member’s property might be utilised to guarantee just 20% of the new loan and the property being purchased would be used as security for the other 80% of the loan. Either way, the bank feels more comfortable as with this type of loan they have protection if first home buyers can’t make repayments or default on their loan.

For first home buyers, it means they can purchase a home, avoid the added cost of mortgage insurance and even be able to borrow more if, for example, the property requires renovations. The family member needs to guarantee a minimum of 20% of the purchase price of the new property if the first homeowners do not have a deposit.

With this type of loan, first homeowners can buy either a home to live in or an investment property.

The other great news is that even if the loan is a family pledge/guarantee loan that the first homeowners are still eligible for a First Homeowners Grant in their State (if applicable) if buying property to live in.

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Who Is This For?

This type of loan is suitable for:

• First-time buyers
• Individuals with a small budget
• Individuals who don’t have the required 20% deposit.
• Individuals who are low on funds, but with a decent credit file and consistent deposit activity in their savings account
• Individuals who have parents, relatives, or friends willing to be named as guarantors

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