Getting family help to buy your home sooner

Saving for a home deposit can be slow going, and you might be looking for ways to help speed things up.

An option you may have is a Family Guarantee. It’s a helping hand from a family member, who agrees to be your home loan guarantor. It’s a way to get you moving into your new home faster as it lets you borrow up to the full amount of your property’s purchase price. What’s more, you could avoid costly Lenders Mortgage Insurance (LMI).

How does a Family Guarantee work?

Our Family Guarantee is structured as two separate loans. The first loan is secured by the home you buy, and is for the majority of that property’s value. The second, smaller loan is considered to be the guarantor loan. It’s secured by the house you’re purchasing, as well as a portion of the equity in your guarantor’s property.

You need to make the minimum monthly repayments on both loans yourself. Keep in mind that your guarantor will be liable for the part of the loan that’s secured against their property if you’re unable to make the repayments – but they don’t have to be liable forever. Once you’ve paid off the second loan, you can apply to remove the guarantee. You could even pay extra off the smaller loan if you want to release the guarantor’s property as soon as possible. Note that early loan repayment fees may apply on some home loans.

You need to buy the property to live in, and not own any another property. Your guarantor needs to be an immediate adult relative. This means your mum, dad, brother, sister, grandparent, spouse, de facto or child. If they have a home loan with another lender, they’ll need to move their home loan to us. See more about what it means to refinance.

Benefits of a Family Guarantee

  • Spend less time saving for a deposit, so you can get on the property ladder sooner

  • Borrow up to 100% of the property’s purchase price plus applicable fees without having to pay LMI, which is a cost you would normally have to factor into your budget if you were borrowing more than 80% of the property’s purchase price.

Before you apply for a Family Guarantee

There are many things to consider, and you and your potential guarantor can sit down and talk about them face to face with a Home Finance Manager. They can meet at a time and place that suits you - even weekends and evenings. It’s also important that your guarantor gets independent financial and legal advice so they understand what they’re potentially signing up for.

You can find out more about what it means to be a guarantor on ASIC’s Money Smart website.

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Things you should know

The information contained in this publication is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this publication without first obtaining specific professional advice. To the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945, its related bodies corporate, employees and contractors accepts no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this publication.