Know your finances
If you’re struggling to break into the market, guarantor home loans can be a great option for reaching that first rung on the property ladder.
Before you get started on this journey, it’s important for you to have a precise knowledge of your current and future financial situation.
What will your deposit be?
For many home buyers, saving a large deposit is one of the biggest hurdles. Before speaking to a guarantor, it’s important to understand your price range and how much deposit you’ll need.
As a guide, a 20% deposit is typically required to avoid paying Lenders Mortgage Insurance. Once you know this figure, you can compare it to your current savings to understand how much support your guarantor may need to provide.
What will your repayments be?
Once you have a property price range in mind, you can estimate your ongoing repayments. Understanding this early is important – especially if you’re using a guarantor, as their property may be at risk if you’re unable to meet your repayments.
Make sure your loan is manageable from the start to avoid putting yourself and your guarantor under unnecessary pressure.
Secure your guarantor
Once you have a clearer picture of your finances, it’s time to speak with your potential guarantor. Most buyers who choose this option reach out to parents or family for support.
It’s important that everyone involved understands the benefits and risks of a guarantor (or family pledge) arrangement before moving forward.
Guarantor finances
Just as it gives your guarantor peace of mind to understand your financial position, it’s important you also understand theirs. Transparency is key to making this arrangement work.
Plan for all outcomes
While a close relationship can make it easier to ask someone to be your guarantor, it’s important to plan for all outcomes. If circumstances change, you’ll both need to work together to ensure everyone is protected.
Get legal advice
Once you and your guarantor have agreed on the arrangement, it’s important for both parties to independently seek advice from a legal or financial professional so everyone involved fully understands the details.
Talk to a lender
When you and your guarantor ready to move forward, it’s a good idea to speak with one of our expert lenders.
We take a responsible approach to lending and will guide you through your options, including guarantor or family pledge loans, so you can make an informed decision.
With competitive rates and a range of flexible loan options, our lenders will support you every step of the way.
Get the right cover
Once you’ve settled, and you’re handed the keys to your brand new home, you should re-consider your level of insurance to make sure both your biggest asset and your guarantor are covered.
Get a quote Home and Contents Inssurance
Your question answered
Can I borrow 100% with a guarantor?
Yes, most lenders will let you borrow up to 100% of the purchase price of your new home, or even slightly more, if you have a guarantor.
Be sure to check with your lender to understand how much you may be able to borrow based on your individual circumstances.
Can you get a mortgage with a guarantor?
Yes, you can. With a guarantor in place, you may be able to secure a home loan with a smaller deposit, or even no deposit in some cases, and potentially avoid paying Lenders Mortgage Insurance (LMI).
How much of a deposit do you need if you have a guarantor?
The more you’re able to save for your deposit, the less you’ll need to borrow.
With a guarantor, you may be able to borrow up to 100% of the purchase price (and in some cases, more) depending on your lender and individual circumstances.